Corporate Integrity in Modern China

Background

On July 10 2011, CCTV, during their “Weekly Quality Report” produced a report titled: “DaVinci Furniture, Alleged Identity Fraud.” The report discussed how DaVinci Furniture became known as influential supplier of high-end and expensive Italian made furniture. DaVinci sales staff commented on why the company can sell their furniture at such a high price: they said that the furniture they sell is 100% Italian, using only the highest quality, all-natural materials. However, after a recent investigation, reporters discovered that DaVinci’s overly priced furniture was, in fact, not ‘100% Italian’ as the company had previously claimed. Much of the furniture that the company sold had actually been produced in Dongguan using fake materials such as the polymer resins Daixinban and MDF rather than the Poplar root thorns they advertised as using.

In another example, on July 12 of this year, a Sina Weibo user named ‘Fu Xiaoxiao’ posted a micro-blog exposing the truth about KFC soya bean milk, which was that the drink was in fact made from a powder. By the 28th of July (just 2 weeks after the post) it had been viewed 15,556 times and had 1,715 comments. The following day on 29th July, the public relations department of the Beijing branch of KFC made a media statement on the matter. They said that the milk in KFC restaurants in Beijing was made mostly from condensed milk whereas in the rest of the country, the milk was produced from powder modulation. An interesting response, however KFC has never advertised its milk products as “ground on the spot”.

In another example of false advertising, WeiQian Ramen has always claimed that its “pig soup is brewed for more than 20 hours” and “a bowl of soup contains up to 1600 mg of calcium.” After this was investigated, the reality became known that the soup is condensed and made by liquid blending. According to Food Science and Nutrition Engineer Dean LuoYunbo at the China Agricultural University, “the test sample is a concentrated sample” and “a bowl of the soup has, in reality, only 48.5mgs of calcium”, a massive amount less than the advertised 1600 mg.

There have been many other examples of similar PR disasters in China with many large companies such as McDonalds and Dairy Queen falling victim.

What the Chinese Tradition Says

Since ancient times, integrity in business has been a strong Chinese virtue. Confucius once said, “If people have no faith in a man, I wonder what else he can achieve?” Mo said that “Integrity is the spiritual link of social interpersonal relationships”; Hanfeizi said that “keeping faith on the little things can build great credit” and Luxun said that “integrity is the essence of man.” In this sense, if integrity is the essence of man, it may also be the essence of how to gain a foothold in society, thus, a micro unit of the market economy.

What is the importance of corporate integrity?

1. Integrity and Competitiveness

   A unique take on corporate integrity can form a core basis for competitiveness for a firm within the market economy. Competition is a constant theme in the market so firms must seek to differentiate themselves in order to increase their market share. Heterogeneity in value-added products has become a strong way for a company to seize market domination. The CEO of the Thingk3 Group, Yang Shitou, said that a “product’s selling points is quality and a service’s selling point is that you serve it with your heart”. In this author’s opinion, to form successful relationships in business one must first be honest, sincere and trustworthy. A company selling high-end products can create a unique core competitiveness if they employ sincerity within their business model.

2. Corporate integrity is the basis for enterprises to maximize profits.

   Survival and development is the objective for a company attempting to maximize economic benefits. However, real and lasting long-term economic benefits come from integrity within a business model. All things are changing and evolving, so we should think in the long-term to pursue business interests and not just focus on the immediate, local and short-term interests. Only with integrity as a business goal can a company truly focus on promoting the establishment of not only long-term business relationships but also long-term economic benefits.

3. Corporate integrity is a catalyst for successful business execution.

   Execution of successful enterprise depends largely on the strength of cohesion within a company. Corporate integrity is undoubtedly the best cohesive gel. A company which focuses on building an ethical culture will instill a strong sense of belonging and ownership within its employees. This will form strong cohesion and will aid in the promotion of common business goals.

4. Corporate integrity is the key to good public relations.

   Markets do not believe in tears, thus the “DaVinci’ Crisis” has not yet created a systemic crisis of confidence. A company with honesty and sincerity as a part of its business model and integrity as its corporate culture will be successful in ‘word-of-mouth’ marketing.

5. Corporate integrity is the key to the integrity of the whole market environment.

   In an open letter addressed to the media, DaVinci pleaded to them to allow a ‘problem-solving environment’ in order to re-build their damaged reputation. They also said, “Please know that our problems are a common industry problem and not company specific”. Only if each enterprise or company has measures in place to enforce self discipline, honesty and integrity can a true business environment be created and PR disasters avoided.

Thus, even in China, integrity is integral for the long term growth of the country’s businesses particularly in a global market. Furthermore, ensuring integrity is an ongoing process that requires tireless persistence. It is thus important to remember when doing business in China, that though it may not always at first appear so, integrity and “saving face” is very important to business in this country, and thus an awareness of this fact can go a long way

• Sophia Yang- CPG HR Assistant

If you enjoyed this article, you also may like our post, “Sourcing and Alibaba” by CPG President, Michael De Clercq.

从几大企业的诚信危机看企业诚信的重要性

背景事件：

2011年7月10日央视《每周质量报告》播出《达芬奇天价家具“洋品牌”身份被指造假》，文中提到：达芬奇家具可以说是国内最具影响力的家具高端品牌，以价格昂贵著称。之所以能将这些家具卖到如此高的天价，达芬奇销售人员说是因为他们销售的家具是100%意大利生产的“国际超级品牌”，而且使用的原料是没有污染的“天然的高品质原料”。但经记者调查证实：达芬奇公司销售的天价家具，并不像它们宣称的那样是100%意大利生产的，而是在东莞的一些家具公司加工的；所使用的原料也不是什么意大利名贵木材白杨荆棘根，而是高分子树脂材料、大芯板和密度板。
2011年7月12日晚间9点39分，新浪网友付小小发表了一条关于肯德基豆浆的微博，截至28日晚，在短短2个星期内被直接转发了15556次，被评论了1715次，被改写后转发数亦有数万次。7月29日，肯德基北京分公司公关部门通过媒体对此事做了回应，称北京市大部分肯德基餐厅供应的醇豆浆是由浓缩豆浆调配而成，全国其他地区的肯德基醇豆浆由豆浆粉调制，肯德基未以“现磨现做”宣传过此产品。
味千拉面一直对外宣传其“汤底是用猪骨经过20多个小时熬制而成”“一碗汤的含钙量高达1600毫克”，后经证实，所谓的骨汤实际是用浓缩汤液勾兑而成。而根据中国农业大学食品科学与营养工程学院院长罗云波的解释，“检测样本为味千拉面委托中国烹饪协会送来的浓缩样品，”一碗汤内的钙含量应该只有48.5毫克，与此前味千标榜的1600毫克相去甚远。
除此之外，还有麦当劳“质量门”——包装破损、暴晒； DQ”冰淇林”——北京芯 等等。
诚信自古以来就是中华民族的传统美德。孔子曾言“人而无信，不知其可也”；墨子曰“诚信者，天下之结也”；韩非子言“小信诚则大信立”；鲁迅先生说过“诚信为人之本”.诚信是人之根本，亦是人立足社会的根本。那么作为市场经济最微观的个体，企业诚信的重要性体现在哪些方面呢？
1、 企业诚信可以形成企业独特的核心竞争力
市场经济环境下，竞争是不变的主题，拥有独特的核心竞争力更是企业脱颖而出，抢占市场的关键。在产品同质化的今天，产品的附加价值成为企业抢夺市场的一个支撑点。智立方集团CEO杨石头曾说“产品卖的是品质,可感知的高品质;服务卖的是用心,令人感动的用心”，那么我想令人感动的用心首先是诚心，其次是守信。产品的高品质附加的用心，可以使企业形成区别于竞争对手的独特核心竞争力。
2、企业诚信是企业获得最大利润的基础
企业的生存与发展是以经济利益的最大化为目标的，而真正持久的经济效益来自于诚信经营。任何事物都是发展变化的，因此我们要用长远、全局的目光追求企业利益，而不是只注重于眼前的、局部的利益。而唯有本着诚信经营的态度和模式，才能专注于促进长期合作的建立，达到共赢,以此来获得持久的经济利益。
3、企业诚信是企业执行力的催化剂
一个企业的执行力强弱在很大程度上取决于企业凝聚力，而企业诚信无疑是凝聚力最好的凝胶剂。一个专注于建设并有着诚信文化的企业，会让员工产生强烈的归属感与主人翁精神，进而形成强大的凝聚力，推动和促进企业共同目标的实现。
4、企业诚信是企业最好的公关
市场不相信眼泪，因此“达芬奇的哭泣”并没有解除达芬奇的信任危机，获得消费者的谅解。一个有着诚信经营作风和诚信文化的企业，本身就会创造出很好的口碑营销。
5、企业诚信是市场大环境诚信的关键
达芬奇在致媒体公开信中提到，希望媒体能够给达芬奇一个解决问题的环境。 “但是请媒体朋友注意的是，我们存在的问题是行业共性问题还是我们企业的个性问题？”，只有每个企业严于律己，诚信经营，才能创造良好的诚信大环境，只有在诚信大环境的约束下，才能减少甚至杜绝失信事件。
骄傲且幸运的是，CPG一直秉承“诚则致富，信必成功”的信条为客户用心服务。本着这种精神，我们将继续一如既往，诚信服务，让CPG越走越好。