Ethics as a Competitive Advantage for APEC SMEs in the Global Supply Chain

May 17, 2011

Anita Ramasastry is a Senior Advisor to the Assistant Secretary of Commerce for Market Access and Compliance who focuses on anti-corruption in trade.

On Saturday May 14, more than 100 participants from the public and private sector – participated in an interactive seminar focused on the why small and medium-size enterprises, or SMEs  in the Asian Pacific Economic Cooperation (APEC) region can gain a competitive advantage through demonstrating a commitment to transparent, ethical business practices .   SMEs account for approximately 99% of businesses within the  21 economies of the APEC region and account for between 30 to 60% of GDP in individual economies.

Senior ethics and compliance officers from leading multinational corporations,  Warner Bros Entertainment, Best Buy, Boeing, ITT and Sealed Air, spoke about the risks they encounter with respect to corruption, bribery and conflicts of interest when doing business in global markets.   The panel described the changing legal landscape  internationally and the need for companies to comply with anti-bribery laws that prohibit illegal conduct wherever they do business. These laws include the U.S. Foreign Corrupt Practices Act and also the new UK Bribery Act., among others.

The panel explained  SMEs often serve many roles, acting as distributors, agents, suppliers, consultants, and service providers in their global supply chains,.  These experts noted  that their companies abide by high ethical standards and look for ethical business partners when operating in overseas locations.  They will often engage in due diligence to determine if an SME will be a trustworthy agent or partner. Each of the panelists noted that SMEs could gain a competitive advantage by demonstrating strong ethical practices and also transparency with respect to their operations and potential conflicts of interest.

They also noted that if a country was too risky and there were too many problems , they could go elsewhere.  Shelley Presser, a  Senior Vice President and Deputy General Counsel for Warner Bros noted that a film could be shot anywhere in the world.  He noted, for example that you could recreate any scene or landmark almost anywhere in the world.

The workshop concluded with a discussion of a series of hypothetical dilemmas that multinationals encounter overseas.  What happens, for example, if a company’s local supplier wants to hire his or her brother-in-law for a contract?  What should companies do if an agent tells them that a government official has requested a trip to visit a plant as part of awarding a government contract?  What kinds of gifts is it okay to give to officials or business partners in other countries?  What happens if a customs officer asks for an extra payment to clear goods through a port?   Through an interactive discussion, SMEs learned about the types of activities that raise concern for multinationals, and also about the need to be proactive about alerting larger companies when problems arise. The takeaway:  SMEs  that take ethics seriously, will gain benefits, including the ability to associate with respected multinational companies

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