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1. Problem statement (What is the case about?

The case is about the ethical dilemma faced by a German headquartered multinational
company NES AG while establishing a holding company in Beijing to coordinate its
investment in China because of the huge cultural differences between China and
Germany’s business environment.
2. Corporate culture of NES China. (Mention the points only).
 Adopted the code of conduct of NES
 Focused on long term mutual benefit
 Trained more than 2000 Chinese engineers, master craftsmen, technicians &
skilled workers
 Scholarship program for young Chinese academics in Germany
 Extensive training programs in China
 Fair business partner and good guest company
3. Business environment in China
 Absence of transparent legal framework
 Relationship based economy
 Bribery (giving gifts with expectations of illegal actions)
 Existence of Guanxi (interpersonal connection based on mutual interest and
 Exchange of gifts and personal favors
 Ethical to use gifts to move administrative process along

4. Possible alternative solutions to overcome the problem (Mention the pros and cons of
each solution alternative)
Some possible solutions to the problem could be-
I. Try for improvement: If NES China can improve business climate without bribery
then they should do it.
Pros- NES will not be deviating from their original corporate culture
Cons- This will take a lot of time. But the headquarters have demanded results in
one month
II. Try to adopt to Chinese business culture: Gift giving is not considered as bribery in
china. Since NES is decentralized it won’t affect their headquarters too much

Pros- This is easily achievable
Cons- Conflicting cultural believes are hard to adapt

5. Pick up the best solution(s). You must give justification favoring your choice.
The best solution here is adopting Chinese business culture. Being culturally different
is not necessarily means being unethical. Giving gifts to the officials is not perceived
as unethical in China. Gifts are supposed to build relationships by benefitting both the
givers and takers. It is the fastest way also. MNCs should follow the host country
standard. Otherwise it would be difficult for them to beat the competitors. Also NES is
decentralized. So it won’t affect much.
6. Design implementation plan (Specify the timeframe and specific course of actions)
 Written ethical conduct especially for international area
 Reward & recognition system
 Training on cross cultural dilemmas on ethics as part of the companies’ policy