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Ethical Issues Faced by GSK in China


GlaxoSmithKline plc, founded in 1935, is a British multinational corporation headquartered in Brentford, United Kingdom. Working along with its subsidiaries, the company is mainly engaged in developing, manufacturing, and production of pharmaceutical products, over-the-counter medicines and health-related consumer products all over the world (Yahoo finance, “GlaxoSmithKline plc (GSK)”). The business ranks 46th among the 500 companies listed in the Fortune 500 list of multinational companies in terms of the highest market capitalization (Financial Times, “FT Top 500 2013”). The activities are spread across 99 cities across 39 major countries across the world. It indicates a massive global footprint of the organization. With the advent of globalisation, expanding activities in a foreign country has become a key tactic pursued by businesses to explore foreign country markets and consequently gain a this is a competitive advantage. GSK is no exception because they follow the same trend approach to lay a solid foundation for the company to do business via expanding into foreign markets. Formulation or rather implementation of such strategy, in addition to the increased benefits for the client, there is also often a concern for the company. One such issue that will be mentioned in this particular essay is the ethical issue that has proven to be of interest to GlaxoSmithKline while operating in the foreign market. Recently, the company has been identified with some ethical lapses when it’s working in China. The company was accused of unethical conduct activities to overcome competition on the market and increase the value of the product. The following parts will include a detailed review of the situation that prevails in the host country, and the organization will face ethical concerns when carrying out its foreign operations. Subsequently, three alternative approaches to eradicate these activities will be clarified and based on a recommendation on the best path to be taken by the organization.

Also Study: GSK Marketing Strategy

Business Environment in China

China, as a developing economy, gives international companies many business prospects for investment. The Land provides access to a large market, thereby providing considerable savings in labour costs. This highlights the country’s massive potential for economic growth. However, precautionary measures must be taken as a gigantic the disparity in the political and cultural climate prevails in China, which can prove to be dangerous, generating confusion for foreign investors (Fogel, “The Business Climate in China: Financial, Political and Cultural Factors”).

Ethical Issues Faced by GSK in China

Economic Environment 

The target of foreign direct investment in the recent past. The country has shown a very healthy economic growth that has drawn top companies from all over the world to invest in China. Four hundred and fifty of the Worlds’ fortune 500 firms are spent in China. International direct investment accounts for 4.1% of national tax income or 58% of total tax revenue international trade and 27% of the value assed production. China has a massive deposit of foreign exchange reserve which helps it conduct trade-related to be imported and exported efficiently. The nation joined the World Trade Organization in 2001, which resulted in rapid growth increase in imports and exports, resulting in an annual foreign direct investment of $60 billion in 2006. China’s foreign-exchange reserve reached $ 1 trillion for the first time in 2006, and after that in 2008, the foreign exchange reserve of China totalled $1.9 trillion (China Foreign Exchange Reserves, “U.S. State Administration”). China is primarily engaged in industrial exports of finished goods, shoes, electronics and textiles as well. It has suffered as far as China’s infrastructure is concerned. Inadequate communication, transportation and energy resources. The country has been thriving to build a world-class infrastructure since 1980. Other concerns that can be associated with China’s support are the growing corruption within the government and the deterioration of the environment.

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