One of Coopertree’s investors knew C.K. Laoshi, a manager at the state-run China Power Investment Corp., who was well-connected to a CIC manager. If Bowman flew to China, Laoshi might be able to make an introduction to CIC. The vague nature of the arrangement made Bowman uncomfortable, yet he decided it was worth the trip. Bowman would fly to Beijing and go to Laoshi’s home for a meeting. If it went well, then Laoshi would make the introduction to CIC. Before Bowman departed, the investor pulled him aside for one last piece of advice:
Chinese culture is an enormous source of pride. Many businesspeople in China, like Laoshi, operate under the principles of Confucianism seamlessly in their work and home lives. And there is a traditional belief that all things — people, places and relationships — contain elements of competing forces that must be kept in balance. The Chinese tend to put enormous emphasis on building close, trusting relationships in business; they don’t tend to rely on contracts as much as Americans do.
When Bowman landed in Beijing, he was met by a lavishly equipped limousine sent by Laoshi. It was clear upon meeting Laoshi that he was extremely courteous; he gave Bowman a warm welcome and introduced him to his wife. But after they sat down, the first request Laoshi made, in the introductory conversation, was that Bowman deposit $800,000 into a Chinese banking account. Laoshi said this was to build trust and the money would be returned to Bowman within 30 minutes of receipt. Bowman had two days to consider his request.
The resolution: After considerable thought, Bowman decided that he could not justify using company funds for a potential connection without a guarantee of getting the money back. He did not know whether he could trust Laoshi after just meeting him.
The lesson: This case highlights the critical importance of trust, integrity and prudence in a global marketplace. Even without a more nuanced understanding of Confucianism and business in China, Bowman could appreciate the magnitude of the decision he faced: Make the payment and secure a contact in the Chinese market, windfall profits for his firm and a trusted friend. However, if that trust were misplaced, he would be out $800,000 and look foolish with no recourse. Trust is a critical asset in business, particularly in areas of global business where relationships and reputations matter a great deal. To make an informed decision, it is critical for Bowman to know more about who he is doing business with and how business is done in China.
Appreciating the value of trusting relationships is universal; understanding how to create and maintain it is something that takes knowledge of the people and places involved. Making such decisions and taking responsibility for these choices is part of the moral burden of managing.
— Andrew C. Wicks
Wicks is a professor at the University of Virginia Darden School of Business and director of Darden’s Olsson Center for Applied Ethics.