Gift giving vs. Grease payments – A slippery slope

Gift giving is an intrinsic part of investing into the emotional bank accounts/ relationships when you work with your Asian counterparts. For example, you may have heard of the term ‘guanxi’ from the Chinese cultural context, as an act of reciprocation or returning a favor. Understanding the role of Guanxi in business is fundamental to building relationships in China. Giving gifts and returning a favor is a matter of maintaining equilibrium in business relationships.

As business operations expand across cultural boundaries, it is important for leaders to understand the boundaries of culturally acceptable practices vs. landing in border line ethical issues (i.e. making grease payments/ bribery for any improper advantage). This is all the more pertinent when working with government officials in foreign countries.

There are several U.S. laws that address the manner in which U.S. firms operate internationally, two of which are Foreign Corrupt Practices Act (FCPA) and the Alien Tort Claims Act (ATCA) ¹. You may find the interpretation of some of these interesting:

·         Paying a government official to expedite a safety inspection does not violate the FCPA¹

·         Reimbursing his or her travel expenses for the site visit does not violate the FCPA¹

·         Offering the inspector money to ignore hazardous findings does violate the FCPA¹

It is important to understand that cultural differences exist with respect to gift giving and grease payments. This will allow businesses to navigate through the interesting challenges of work with diverse national cultures.

Note:

‘Cultural Imperialism’ is the belief that one’s culture is right and others are wrong.

‘Cultural Relativism’ the belief that right or wrong is determined by one’s culture and there are no universal principles of right or wrong (or good or bad) across cultures.

Neither approach is ideal. While global firms must understand that practices in other countries are often different rather than unethical, they must also ensure that certain minimum standards are upheld. Cultural Competence is a subject that allows you to recognize, respect and reconcile on value differences between nations and avoid making judgments of right and wrong.

 

¹ SHRM- International Employee Relations and Regulations

Tags: Cross Culture, Cultural Communication, Cultural Competence, Global Culture, Global Mindset, International Employee Relations