M04_WICK7921_01_SE_C04.

QXD 6/9/09 12:14 PM Page 121

Chapter 4 • Business Ethics in a Global Marketplace 121

The Journalist However, the system of payments still

Chris was a journalist who wrote a feature
article about a nonprofit organization that
had just moved into the community. After
the story appeared in the paper, leaders
within the organization presented Chris
with a certificate of appreciation and a
fountain pen worth $100. Should Chris
keep the certificate and the pen?
remains largely unchanged. Delays are
expensive. Would and should you make the
payments? Why or why not?
Suppose that you are told that instead
of making a cash payment, you may hire a
consultant to help you expedite your ship-
ments. You know that the consultant has
“good connections” in the government, and
you suspect that the consultant makes cash
payments to the officials to expedite things.

n
Customs
Would and should you hire the consultant?

io
Your company is doing business in Country

n
X, and you have recently been appointed to
the position of Country X manager. Your The Contract

or 0 at

io
company, a manufacturing operation in X, In order to bid on a construction contract in
exports most of the goods made in X. You Country X, it was customary to meet with

at
e 01 c
are told of a problem with delays in customs Ministry officials. At the meeting it became
in X. It is customary to make cash payments
al )2 du known that a payment would be necessary
to customs officials (whom you understand in order to have the bid seriously considered.

lic
are very poorly paid) in order to expedite
the handling of critical inputs to your man-
r S (c E
ufacturing process. You have complained to
You made the payment (a small amount),
submitted a bid, and won the contract. The
deputy minister then called you to tell you

up
higher officials in the past, and some disci- how to arrange a 10 percent “fee” that was
plinary actions were eventually taken. “due” to the Minister. What should you do?
on

D
s
ar

GE Healthcare In India: An (Ultra) Sound Strategy?

“Raising a daughter is like watering your global headquarters had set an even higher
Pe

neighbor’s garden.” target growth rate of 20% for the India oper-
—Punjabi proverb ations. Given the market potential and GE’s
successful low-cost operations and deep

V. Raja, president and CEO of GE Healthcare

India, left the 2005–06 annual meeting with a
This case was prepared by Mayank Jain (MBA ’08),
sense of achievement. The fiscal year had Jenny Mead, Olsson Center Senior Ethics Research
been excellent both for the company and for
fo

Associate, and Jared D. Harris, Assistant Professor of

Raja himself. GE Healthcare India, a joint
venture between General Electric (GE) and
the Indian multinational Wipro Ltd., had
ot
Business Administration. It was written as a basis for
class discussion rather than to illustrate effective or
ineffective handling of an administrative situation.
Copyright © 2008 by the University of Virginia Darden

ended the year as the market leader in the School Foundation, Charlottesville, VA. All rights
$77 million ultrasound machine market, out- reserved. To order copies, send an e-mail to sales@
pacing its competitors, which included dardenbusinesspublishing.com. No part of this publi-
N

Toshiba, Siemens, Philips, and Mindray
International Medical, a Chinese company.
GE Healthcare India’s sales were up by a sig-
nificant 10% in 2006. For the year 2007,
cation may be reproduced, stored in a retrieval system,
used in a spreadsheet, or transmitted in any form or by
any means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of
the Darden School Foundation.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 122

122 Part I • Ethics and Business

EXHIBIT 1 GE HEALTHCARE IN INDIA: AN (ULTRA) SOUND STRATEGY?

Hyderabad Officials’ Attempts to Crack Down on Illegal Ultrasounds

Hyderabad officials had noticed the area’s extremely skewed sex ratio (933 girls to 1,000 boys) in
2005. District Magistrate Arvind Kumar had been trying to enforce the laws that regulated the use
of ultrasound machines. He had ordered the 389 area clinics with registered ultrasound machines to
show up for a workshop. Some 124 centers failed to show. Kumar had then ordered them to turn in
“F Forms” for every ultrasound given, copies of referrals from doctors and documentation on
whether the woman who got the ultrasound ever gave birth. Fifty-three centers refused to give him
any information at all. Of the paperwork Kumar did receive, he found that in 67 percent of the

n
cases, the woman arrived at the clinic without the required referral from a doctor, and indication
that she intended to abort the child. In 69 percent of the forms he got back, the ultrasound center’s

io
address did not appear. Frustrated by these centers’ unwillingness to enforce or abide by the laws

n
governing ultrasound use, Kumar in January 2005 sent out 374 notices to ultrasound clinics
threatening to suspend them.

or 0 at

io
Source: Julia Duin, “GE Machines Used to Break Law,” Washington Times, March 1, 2007, A1.

at
e 01 c
al )2 du
market penetration, Raja looked forward to (See Exhibit 1 for background on clinic inves-

lic
2007 with cautious confidence in his firm’s
products and salespeople.
r S (c E
Later that morning, as Raja sipped a
tigations and closures in Hyderabad.) The
government had tried, unsuccessfully, to get
the clinics with ultrasound machines to com-

up
cup of tea while looking at the 2007 pro- ply with the laws. The result: 102 clinics had
jections, his secretary, looking concerned, their registrations suspended, police seized
on

handed him several newspaper articles. 112 ultrasound machines, and—most alarm-
D
One glance at the headlines, which
described several Indian government offi-
ing to Raja—three suppliers, including
Wipro GE Healthcare, had been accused of
s

cials’ crackdown on ultrasound machines, supplying machines to clinics without regis-

and Raja’s post–annual meeting elation tering them with the government. This was
ar

disappeared. simply the latest—albeit fairly drastic—event

The first article Raja read described in the growing controversy surrounding
how government officials in Hyderabad, the ultrasound in India. Raja was aware that
Pe

capital city of the Indian state of Andra
Pradesh, had been confiscating ultrasound
machines that they suspected were being
used illegally to determine the sex of unborn
children. In one photograph, showing a dis-
trict health officer wrapping up a clinic’s
ultrasound machine to take it away, a
poster/advertisement for GE ultrasound
fo
ultrasound was used for prenatal sex deter-
mination and that GE Healthcare had taken
many measures to prevent such use, but
wondered if there was more that the com-
pany could do.
GE Healthcare

machines—featuring a pregnant belly and GE Healthcare was a $14 billion unit of GE, a
the company’s slogan “We bring good things multinational American technology and
to life”—was prominently displayed on the services corporation founded by Thomas
ot

wall. The clinic, according to the article, was Edison in 1890. By the early 21st century,
one of many where doctors and nurses had
violated India’s Prenatal Diagnostic
N

Techniques Act of 1994, and its subsequent 1

Before getting an ultrasound, women (ages 15 to 45)
2003 amendment, that banned the use of were required to fill out Forms F (personal details) and
technology such as ultrasound and sono- G (consent form). These forms were printed and kept
gram for the purpose of sex determination. by the ultrasound centers.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 123
Chapter 4 • Business Ethics in a Global Marketplace 123
GE manufactured products as diverse as
airplanes and light bulbs and owned six
businesses: GE Commercial Finance, GE
Healthcare, GE Industrial, GE Infrastruc-
ture, GE Money, and NBC Universal. Head-
quartered in the United Kingdom, GE
Healthcare had manufacturing, research and
development, and administrative offices in
11 countries, including India, and sales and
marketing operations in more than 100
countries. The company had 46,000 employ-
n
ees worldwide, 2005 revenues of $15.2 bil-
io
lion, and 2006 revenues of $16.6 billion. GE
n
Healthcare comprised six units, including
diagnostic imaging, surgery, clinical sys-
or 0 at
io
tems, life sciences, medical diagnostics, and
integrated IT solutions. Its stated mission
at
e 01 c
and vision was
al )2 du
to help healthcare providers pre-
lic
dict, diagnose, inform, and treat
disease earlier so that every indi-
vidual can live life to the fullest.
r S (c E
up
Our vision for the future is to
enable a new “early health”
model of care focused on ear-
on
lier diagnosis, pre-symptomatic
prevention.1
D
disease detection and disease
s
ar
GE in India
GE had first entered India in the late 1980s,
Pe
when its famous CEO Jack Welch visited
the country to establish a business relation-
ship. Indeed, “early investments by GE in
India gave their technology and business-
service sectors crucial credibility and cash
when other companies still viewed the
country as a risky backwater.”2 Many cred-
ited Welch, and GE’s presence there, with
fo
fueling the economic boom that would
come in the 1990s. India had proved to be a
key market not only for GE but for GE
ot
Healthcare. Wipro GE Healthcare,3 part of
GE Healthcare South Asia, was a joint ven-
ture between GE and Wipro Corporation,
N
India’s third-largest software provider
located in Bangalore. The joint venture’s
business activities included the design and
manufacture of ultrasound scanners and
cardiology products (e.g., ECG and fetal
monitors); sales and service of medical
imaging and information technology prod-
ucts; parts and services logistics; software
services and technology solutions; training-
in-partnership (TIP) programs that offered
customer support and training; and design,
sourcing, and manufacture of diagnostic
imaging systems (X-ray and MRI, among
others).4 It manufactured and distributed
products globally as well as within India
where, as a venture with $100 million in
revenues, it was the country’s “largest med-
ical systems sales and service provider.”5
GE Healthcare began manufacturing and
selling ultrasound machines in India in the
1990s, and took advantage of Wipro’s
robust and extensive distribution and serv-
ice networks to deliver its product to
approximately 80% of its customers. In
India’s remote areas, the company used
sales agents to market the machines.
The company’s diagnostic equipment
sales in India had risen from $30 million
in 1995 to $250 million by 2006. In a
November 2006 internal presentation enti-
tled, “Tapping the India Opportunity—
India Healthcare Market,”6 Anurag Gupta,
GE Healthcare’s vice president of customer
service, South Asia, identified the country’s
key manufacturing advantages. He specifi-
1
GE Healthcare Web site, http://www.gehealthcare.
com/usen/about/ge__factsheet.html (accessed Feb-
ruary 15, 2008).
2
Jay Solomon, “In India’s Outsourcing Boom, GE
Played a Starring Role,” Wall Street Journal, March 23,
2005, A1.
3
Wipro GE Healthcare was alternately known as
Wipro GE Medical Systems Private Ltd. GE Healthcare
had a 51% stake in the joint venture, Wipro 49%.
4
“GE HealthCare in India,” http://www.ge.com/in/
ourbusiness/ge_healthcare.html (accessed February 10,
2008).
5
“About Wipro GE Healthcare,” http://www.
gehealthcare. com/inen/company/co_aboutus.html
(accessed February 10, 2008).
6
Anurag Gupta, “Tapping the India Opportunity:
India Healthcare Equipment Market,” WiproGE
Healthcare, South Asia, November, 2006. See http://
www.ficci.com/media-room/speeches-presentations/
2006/nov/us/HealthcareMedicalEquipment/Anurag
Gupta.pdf for presentation (accessed February 11,
2008).
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 124

124 Part I • Ethics and Business

TABLE 1 2006 Sample comparison health care statistics8

United States Japan India

Population 290 million 130 million 1,200 million
Health care spending per capita $5,670 $1950 $28
Health care spending, percentage 15.3% 7% 5.1%
of GDP

n
cally mentioned India’s superior engineer- structures or functions in the heart; detect-
ing skill relative to the United States, ing kidney stones and measuring the blood

io
Germany, and China; its rapidly growing

n
flow through the kidney; detecting prostate
vendor base of international standards such cancer early; and increasingly, ultrasound

or 0 at

io
as ISO-9001; its rapidly growing domestic was used in emergency room diagnoses.
demand; and the factor of companies want- GE Healthcare had helped introduce
ing to reduce its risk related to China.

at
ultrasound technology into the rural areas

e 01 c
Gupta deduced from his market-share-to- of India, where health care resources were
al )2 du
profitability analysis of multinational com- scarce. Only 20% of India’s hospitals were

lic
panies (MNCs) operating in India that there
were indeed some MNCs that demon-
strated it was possible to build large and
r S (c E
in rural communities, although 70% of the
country’s population lived there. Statistics
revealed “a gaping urban–rural divide in

up
profitable businesses in India and that man- health-care access”9 in India, where “about
ufacturing companies were likely to drive 88% of towns have a health-care facility,
further growth in the country. The presen-
on

compared with 24% in rural areas—90% of

tation cited examples of companies (such as which are manned by sole practitioners.”10
D
Maruti-Suzuki and Hyundai) that had set
up successful manufacturing operations in
Getting medical attention was difficult at
best, with—on average—a 6-kilometer
s

the country.7 Despite GE Healthcare’s suc- walk for a blood test and a 20-kilometer
cess thus far in the Asian and Indian mar-
ar

walk to a hospital. As a result, many people

kets, there were still many opportunities for in rural communities did not seek medical
growing business in these countries. While attention, sometimes under the direst of cir-
20% of the world’s population lived in
Pe

India, the penetration of health care tech-
nologies was one of the lowest globally. See
Table 1 for comparison. The Indian govern-
ment had begun to focus on funding the
poorer segments of the population, which
constituted 760 million (out of 1,200 mil-
lion) of India’s inhabitants. Since those peo-
fo
cumstances.
Despite any social problems arising
from the illegal use of the GE Healthcare
ultrasound machines, Raja was convinced
that GE was also making significant inroads
into providing affordable and quality health
care technology to Indian patients. Raja
knew GE had played a pivotal role in

ple were vastly underserved, this presented providing these services to patients across
a huge opportunity for market growth.

Ultrasound: The Benefits

ot

7
Gupta.
Ultrasound technology had a vast array of 8
Gupta.
9
critical applications. It was used in early Jeetha D’Silva, “‘In India, For India,’ GE Health Eyes
N

detection of fetal defects or complications
during childbirth; diagnosis of gallbladder
disease or obstructions; evaluation of blood
flow in blood vessels; identifying abnormal
Rural Market,” Live Mint/Wall Street Journal, Nov-
ember 8, 2007, 11. Also http://www.livemint.com/
2007/11/07220001/8216In-India-for-India8.html
(accessed April 23, 2008).
10
D’Silva.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 125

Chapter 4 • Business Ethics in a Global Marketplace 125

EXHIBIT 2 GE HEALTHCARE IN INDIA: AN (ULTRA) SOUND STRATEGY?

Indian Sex Ratio Statistics

Girls Per 1,000 Boys

980

970

960
Girls per
1,000 Boys

n
950

io
940

n
930

or 0 at

io
920

at
e 01 c
1950 1960 1970 1980 1990 2000 2010

al )2 du
Source: Sanjay Kumar, “Ratio of Girls to Boys in India Continues to Decline,” British Medical Journal, 327:

lic
November 1, 2003; http://www.bmj.com/cgi/reprint/327/7422/1007 (accessed September 16, 2008).
r S (c E

up
India, particularly in rural areas. Having
ultrasound available in these areas had cut
costs tremendously for patients (travel, time
on
report,14 about 7,000 fewer girls than
expected were born daily in India, and about
10 million fewer girls than expected were

spent away from work, higher costs at born since 1986. See Exhibit 2 for information
D
urban medical centers), and they were less
fearful of having diagnostic tests in the com-
about the skewed sex ratio trend in India.
Historically—in fact, dating back centuries—
s

fort of their own villages. As a result, many Indian societal norms favored male children
more people were getting the medical atten- to female children. See Exhibit 3 for ultra-
ar

tion they needed. sound machine import and sales statistics.

A 2006 study by the British medical
journal the Lancet15 confirmed, after ana-
Pe

Ultrasound: The Controversy

lyzing data from more than 1.1 million
Raja, however, had not anticipated the use of
Indian households, that approximately 10
his machines as tools in prenatal gender
million girls had been aborted in the 1980s
determination and the resulting abortions of
and 1990s The study also compared the
female fetuses. Nor had he anticipated that
girl-to-boy birth ratios of children born to
the situation would reach such a critical
point. He was well aware that Jack Welch
had, back in the early 1990s, “assured the
fo

American business media that GE was not 11

coming to India to exploit the market for
sons.”11 But the population figures that had
ot
http://www.edelman.com/speak_up/blog/archives/
2006/12/three_points_of.html (accessed September 8,
2008).
12
In general, with no sex predetermination, scientists

recently emerged had been startling. The
2001 Indian census revealed that there were
927 girls to every 1,000 boys, down from
N
approximated the natural sex ratio worldwide to be
105 boys to 100 girls.
13
Carla Power, “NS Special Report...but What if It’s a

945:1,000 in 1991 and 962:1,000 in 1981.12 In
1991, no Indian district had a ratio of less
than 800:1,000, but by 2001, 14 districts did.13
According to December 2006 UNICEF
Girl?,” New Statesman 135, 4789 : April 24, 2006, 28.
14
Government of India, 2001 census figures.
15
Prabhat Jha et al., “Low Male-to-female Sex Ratio of
Children Born in India,” Lancet, 367.9506, January 21,
2006, 211.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 126

126 Part I • Ethics and Business

EXHIBIT 3 GE HEALTHCARE IN INDIA: AN (ULTRA) SOUND STRATEGY?

Imports and Sales of Ultrasound Scanners

Imports of Ultrasound Scanners

5,000

4,000

3,000 Imports of Linear

n
Ultrasound
2,000 Scanners

io

n
1,000

or 0 at

io
0
1991–1994 1994–1997 1997–2000 2000–2003

at
e 01 c
Sales of Ultrasound Scanners in India
al )2 du

lic
Units Sold Revenues (in millions)
2002 3,295 $61
r S (c E

up
2003 3,465 $63
2004 3,640 $66
on

2005 3,805 $70

D
2006 4,050
Source: Adapted from Peter Wonacott, “Medical Quandary:
$77
s

India’s Skewed Sex Ratio Puts GE Sales in Spotlight,” Wall Street

Journal, April 18, 2007, A1.
ar

Source: Adapted from Ajay Mahal, Anil Varshney, and Srinivas Taman, “Diffusion of Diagnostic Medical
Pe

Devices and Policy Implications for India,” International Journal of Technology Assessment in Health Care 22, no. 2
(2006): 184–90.

married Indian women. Chances were The Indian Socioeconomic Scenario

good that a family’s second child would be
a girl if it already had a boy. But second or
third children were significantly more
likely to be boys, studies showed, if the
fo
In India, as in some other countries such as
China and Korea, many families preferred
sons to daughters for a variety of reasons,

including cultural taboos. For example,

family did not already have a male child, many Indians believed that a family with-
indicating that additional ultrasound gen- out a son was unbalanced. Practical reasons
der predetermination had occurred. The also led to the preference: Boys continued
ot

Lancet study indicated “that prenatal sex the family name and bloodline, earned
determination and selective abortion prob- money, looked after the family, and took
ably account[ed] for nearly all the deficit in
N

care of parents in their old age. India had no

the number of girls born as second or third
children after previous female births.”16
(See Exhibit 4 for statistics on second- and
third-child births.) 16
Jha et. al.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 127

Chapter 4 • Business Ethics in a Global Marketplace 127

EXHIBIT 4 GE HEALTHCARE IN INDIA: AN (ULTRA) SOUND STRATEGY?

Statistics of Second-Child Births

1,200

1,000

800
Girl Child
600

n
Boy Child
400

io

n
200

or 0 at

io
0

at
Family already Family already Family already

e 01 c
has a boy has a girl has two girls
al )2 du

lic
Source: Adapted from Jha et al.
r S (c E

up
social security system, so parents relied on rupees.”19 The cost of a dowry and the
their children for support. In Hindu tradi- wedding could reach $35,000—10 times the
on

tion, a son was supposed to light his par- annual income of the average Indian civil
D
ents’ funeral pyre. “Almost from creation to
cremation,” said International Planned
servant.20 If a daughter remained unmar-
ried, her parents considered her a burden.
s

Parenthood’s Nina Puri, “women are dis- She often could not work to support her
criminated against.”17 parents because of lack of education, and
ar

Having a daughter was socially and because her parents wanted to protect her
emotionally acceptable if there already was from influences outside the home (the pro-
a son, but not if the family already had a tection of the unmarried woman’s virginity
Pe

daughter. In general, Indian families con-
sidered a daughter to be a liability. There
was a Punjabi proverb, “Raising a daughter
is like watering your neighbor’s garden,”18
which meant that money spent on a daugh-
ter only benefitted others because she
would eventually belong to the family of
her future husband. In some communities
fo
was considered central to a family’s honor).
In many developing countries, the life
of a woman revolved around an extended
family consisting of in-laws, and home-
bound duties were inevitable. A frequently
used and even an official description was

where the custom of dowry prevailed

(although it was formally illegal), the cost
of a girl’s dowry could be astronomical,
ot
17
“Sex Selection in India,” Religion & Ethics Newsweekly,
Episode 400, PBS, June 1, 2001 (http://www.pbs.org/
wnet/religionandethics/week440/cover.html; accessed

and many families had to borrow money to September 19, 2008).

fund it. By the 21st century, dowry costs 18
Julia Duin, “India’s Imbalance of Sexes,” The Washing-
had skyrocketed. As one writer put it, ton Times, February 26, 2007, A01.
N

19
“Where the grandmothers of today recall Power.
20
M. H. Ashan, “Gender Differentials in Famine
going to their husbands’ homes with a Mortality: The Killer Mothers,” Hyderabad News, 2006,
pot or two and a few rupees, a modern http://www.hyderabadnews.net/news2/female.htm
dowry can cost hundreds of thousands of (accessed February 13, 2008)
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 128
128 Part I • Ethics and Business
the phrase “ever-married,” which referred
to an Indian woman who spent her life in
the service of her family. In this society,
women were dependent on their husbands
and in turn, both were dependent on his
parents. A woman was often blamed if she
did not give birth to a boy, although techni-
cally, the husband’s sperm determines the
sex of a child.21 Often, demanding in-laws,
not wanting a granddaughter, would put
pressure on a young couple to have prena-
n
tal sex determination.
io
n
The missing girls
or 0 at
io
In India, before the development of modern
technology (amniocentesis and chorionic vil-
at
e 01 c
lus sampling, two tests designed to deter-
mine genetic abnormalities in the fetus, as
al )2 du
well as the ultrasound scans), baby girls
lic
were often the victims of infanticide: left to
die or killed shortly after birth, sometimes
r S (c E
by gruesome means such as boiling them or
up
choking them with milk,22 poisoning, or
simply letting them starve.23 Infanticide
on
decreased, however, with the introduction of
D
ultrasound machines into India in the 1970s,
and aborting female fetuses became com-
monplace. This practice was more prevalent
s
in urban areas and within the more edu-
ar
cated, and the discrepancy in sex ratio more
was pronounced in cities. See Table 2.
But as the technology became cheaper
Pe
and the Indian economy grew in the 21st
century, abortion became more widespread
in rural areas. There were no Hindu restric-
tions on abortion, and only minimal legal
constraints. The approximate cost for a sex
determination test was $8, and while that
was generally a week’s wages for many, it
paled in comparison to the cost of provid-
fo
ing a dowry for one’s daughter.
ot
TABLE 2 Number of girls per 1,000 boys
in urban versus rural areas24
N
1981 2001
Urban 959 girls 906 girls
Rural 963 girls 934 girls
The Prenatal Diagnostic Techniques
(PNDT) Act, 1994
The Indian government had first tried to
address the issue of sex selection with a par-
tial ban on tests for it in 1976. In the early
1980s, when private clinics offering these
tests began cropping up, many activists
protested against them. In 1985, the Forum
Against Sex Determination and Sex Pre-
Selection was formed, and in 1988, India
passed the Maharashtra Act, which further
tightened restrictions on prenatal diagnostic
techniques. Seeing little effectiveness from
these measures, India in 1994 approved the
Pre-natal Diagnostic Techniques (PNDT) Act,
which, beginning in 1996, banned the use of
technology, such as ultrasounds and sono-
grams, for the purpose of sex-selective abor-
tion. The law also banned advertisements for
prenatal sex determination, as well as the
practice of preconception sex determination.
India had also tightened laws on the sale of
ultrasound equipment, making it illegal to
sell the machines to unqualified practitioners,
and asking manufacturers to provide details
of recent ultrasound buyers. Doctors were
also required to fill out a “Form F,” giving the
reason for carrying out the ultrasound test,
whether the woman previously had children,
and a signed statement by both the woman
and her doctor saying that they did not want
to know or divulge the sex of the child.
Although the penalty for breaking the law
increased in 2002 to two years in prison and a
$230 fine for the first offense and a five-year
prison term and $1,160 fine for the second, it
was almost never enforced. As an indication
of how ineffective the law was, no doctor
went to prison for violating it until 2006.
In 2003, the PNDT Act and Rules was
amended to address the emerging tech-
nologies for selection of sex before and after
21
If the sperm had an X chromosome, then the child
would be a girl; a Y chromosome would produce a
boy; sperm is generally half X, half Y.
22
Julia Duin, “Lots of Sting, No Pain,” The Washington
Times, February 28, 2007, A01.
23
Ashan.
24
Jha et. al.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 129

Chapter 4 • Business Ethics in a Global Marketplace 129

EXHIBIT 5 GE HEALTHCARE IN INDIA: AN (ULTRA) SOUND STRATEGY?

New Rule 3A: Sale of ultrasound machines/imaging machines:

(1) No organization including a commercial organization or a person, including manufacturer,

importer, dealer or supplier of ultrasound machines/imaging machines or any other equipment,
capable of detecting sex of fetus, shall sell distribute, supply, rent, allow or authorize the use of
any such machine or equipment in any manner, whether on payment or otherwise, to any
Genetic Counseling Centre, Genetic Laboratory, Genetic Clinic, Ultrasound Clinic, Imaging Centre
or any other body or person unless such Centre, Laboratory, Clinic, body or person is registered
under the Act.

n
(2) The provider of such machine/equipment to any person/body registered under the Act shall send
to the concerned State/UT Appropriate Authority and to the Central Government, once in three

io
months a list of those to whom the machine/equipment has been provided.

n
(3) Any organization or person, including manufacturer, importer, dealer or supplier of ultrasound
machines/imaging machines or any other equipment capable of detecting sex of fetus selling,

or 0 at

io
distributing, supplying or authorizing, in any manner, the use of any such machine or equipment
to any Genetic Counseling Centre, Genetic Laboratory, Genetic Clinic, Ultrasound Clinic, Imaging
Centre or any other body or person registered under the Act shall take an affidavit from the

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Genetic Counseling Centre, Genetic Laboratory, Genetic Clinic, Ultrasound Clinic, Imaging Centre
or any other body or person purchasing or getting authorization for using such machine
al )2 du

lic
/equipment that the machine/equipment shall not be used for detection of sex of fetus or
selection of sex before or after conception.”
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Source: Ministry of Health and Family Welfare, New Delhi, http://health.nic.in/The%20PNDT%20
(AMENDMENT%20RULES),%202003.htm (accessed September 16, 2008)
on

D
conception as well as the difficulty of
implementing the act. It was designed to
target the medical profession, or the supply
daughters received twice as much as the
mothers of boys. Some districts provided
girls from poor families a place to live, free
s

side of the sex determination tests. See schooling and supplies, and bicycles,
ar

Exhibit 5 for amendment details. An unin- among other items. In 2006, the Directorate
tended consequence of India’s trying to of Family Welfare in Delhi instituted a
crack down on the use of ultrasound “Respect the Girls” campaign, with posters
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machines for sex determination was that
many practitioners went underground.
Unable to advertise, these practitioners
found subtle ways to alert the public that
the tests were available. To escape legal
action, many doctors and clinicians gener-
ated no paperwork for the procedure. Quite
often, also, these “bootleg” sex determina-
fo
that read “If you kill daughters, you will
keep searching for mothers, daughters, and
wives” and “Indira Gandhi and Mother
Teresa: Your daughter can be one of
them!”25 The campaign had not been effec-
tive; 2006 statistics showed that there were
even fewer girls in Delhi, down to 814 (per
1,000 boys) from 845 in 2003.

tion scans became more expensive. In India, there were those who insisted
that sex predetermination was a good thing.
“Respect the Girls” It was an effective means of population con-
ot

trol, for one. When families would keep

With the ineffectiveness of the PNDT Act having children until they produced a son,
and its amendments, the Indian govern- sex-selective abortions would allow parents
N

ment had taken measures to stop the abor- to determine the makeup of their families
tion of female fetuses. In 2003, it began a
policy of giving homeless women money to
25
help with their newborns. Mothers with Power.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 130
130 Part I • Ethics and Business
while still keeping them small. Some critics
of outlawing sex determination argued that
a family that could choose to have a son and
daughter was more balanced.
But the critics of sex predetermination
were many. If such trends continued, many
social scientists predicted social upheaval,
even war. Political scientists argued that the
existence of millions of frustrated bachelors
across India and other Asian countries
would boost crime and lawlessness.26 The
n
Nobel Prize–winning economist Amartya
io
Sen along with others “argued that sex
n
selection both reflect[ed] and reinforce[d]
women’s low social status, which—beyond
or 0 at
io
its intrinsic cruelty—impede[d] the devel-
opment of democracy and prosperity in
at
male-skewed nations.”27 Men with money
e 01 c
would be able to afford wives, who subse-
al )2 du
quently would become little more than sta-
lic
tus symbols. Indeed, by 2006, the trafficking
of women had skyrocketed particularly in
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the northern states of Haryana and Punjab,
up
home to India’s most skewed sex ratios.
on
D
China: Perhaps a Warning
India was not unique in the challenges asso-
ciate with a sociocultural preference for male
s
children. While the growing imbalance was
ar
of great concern in India, in China, the prob-
lem existed in a “frightfully larger scope
when ‘son preference’ meets the notorious
Pe
One Child policy,”28 which was imple-
mented to slow the country’s population
growth. The Chinese preference for boys
along with the easy availability of abortion
had created an extremely skewed gender
ratio, and presented, according to Zhang
Weiqing, the head of China’s National
Population and Family Planning Commis-
fo
sion, a “phenomenon” that would “affect
social stability and harmony.”29 Since 1979,
when the one-child policy was implemented,
ot
the ratio went from approximately 100 (girls)
to 106 (boys) to 100:121. Over the same time
period in which the Chinese gender ratio had
N
become more skewed, China had seen a cor-
related rise in the consequences: a dwindling
labor pool, a lack of potential wives for
Chinese men, the resulting sex trafficking of
women, an extraordinarily disproportionate
number of seniors, and a society that many
experts believed had the potential to become
more violent.30 In a 2004 book, Bare Branches:
The Security Implications of Asia’s Surplus Male
Population, two Harvard political scientists
argued that a surplus of males in a society
led to domestic and then international vio-
lence. Bored and unmarried, single men—
called “bare branches” in China—were more
apt to turn to “banditry, rioting, or milita-
rization.”31 Already, by 2006, there were an
estimated 25 million “bare branches.”
According to the New England Journal of
Medicine, the shortage of women in China
was probably a factor in increased “mental
health problems and socially disruptive
behavior among men.”32 In addition, a num-
ber of scholars and public figures, both
Chinese and Western, had expressed increas-
ing concern over the potential for increased
numbers of commercial sex workers, with
the resulting rise in sexually transmitted dis-
ease, including HIV.
GE’s Unscrupulous Practices?
To boost sales of its ultrasound machines in
India, GE Healthcare had targeted small-
town doctors and clinics, teaming with finan-
cial institutions to help them finance the
purchase of their equipment. GE Healthcare
26
Andrea den Boer and Valerie Hudson, Bare Branches:
The Security Implication Of Asia’s Surplus Male
Population. (Cambridge: MIT Press, 2004).
27
28
Glenn.
Michael Fragoso, “China’s Surplus of Sons: A
Geopolitical Time Bomb,” Christian Science Monitor,
October 19, 2007, 9.
29
Wang Zhuoqiong, “Sex Imbalance Linked to Social
Ills,” China Daily, August 23, 2007, http://www.
chinadaily.com.cn/china/2007-08/23/content_
6036938.htm (accessed September 8, 2008)
30
“China Grapples with Legacy of its ‘Missing Girls,’”
China Daily, September 15, 2004; http://www.chinadaily.
com.cn/english/doc/2004-09/15/content_374629.
htm (accessed September 4, 2008)
31
Fragoso.
32
Therese Hesketh and Zhu Wei Xing, “The Effect of
China’s One-Child Family Policy after 25 Years,” New
England Journal of Medicine, 353, no. 11: (September 15,
2005): 1,173.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 131
Chapter 4 • Business Ethics in a Global Marketplace 131
also kept its prices down by refurbishing old
equipment and marketing “economy” mod-
els in poorer areas. The company also tar-
geted doctors who traveled frequently by
marketing laptop machines. And it offered
discounts to buyers inclined to boast about
their new gadgets. “Strategically, we focused
on those customers who had big mouths,”33
said Manish Vora, a former ultrasound sales-
man in the western Indian state of Gujarat.
Sabu M. George, an activist and senior
n
fellow at the Centre for Women’s
io
Development Studies in New Delhi, decried
n
GE Healthcare’s practices in India, saying
that the company had sold ultrasound
or 0 at
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machines to “quacks,”34 offered cheap credit
that made the machines affordable to most
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doctors, and targeted small towns in India,
where one doctor’s purchase of a machine
al )2 du
would compel other area doctors to pur-
lic
chase them to compete. “Multiple machines
where there is little demand for legitimate
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prenatal care increases competition,” George
up
wrote, and “reduces scan rates and moti-
vates abuses like fetal sex determination so
on
that clinics can recover their investment.”35
D
George wrote that he had seen doctors and
clinics throughout India openly and aggres-
sively marketing sex determination. In short,
s
George argued:
ar
At the global level, it is impera-
tive that those concerned with
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human rights expose the transna-
tional corporations involved in
marketing ultrasound machines
for these purposes. Sadly, the
Indian business media is not gen-
der-sensitive, and has only glori-
fied companies like GE Wipro
for manufacturing sophisticated
medical instruments for export.36
fo
GE Healthcare in the Hot Seat
ot
As a result of the rising criticism of ultra-
sound machines and their role both in sex
predetermination and off-balance sex ratios,
N
GE’s operations and strategy had come
under fire. The company faced legal issues,
intense government scrutiny, pushback
from activists for what they considered its
aggressive sales tactics, and a myriad of
business problems. GE Healthcare had also
taken steps to minimize illegal use of the
machines. It had educated its salespeople
about the government restrictions, required
affidavits from its customers stating that
they would not use the machines to prede-
termine a fetus’s sex, and conducted fre-
quent audits to ensure that its clients were
in compliance. In 2004, the first year that GE
Healthcare took these steps, the company
admitted that its sales had shrunk by 10 per-
cent, particularly in the low-end Indian
market. By 2006, however, sales had
rebounded.37
Activists accused GE of not doing
enough to prevent unlawful use of its
machines because the company wished to
boost sales. “The demand for the boy child
is being completely exploited by GE and
other ultrasound manufacturing firms,”38
said a practicing obstetrician in New Delhi.
He said GE and other suppliers marketed
the machines as an essential tool, although
scans were often unnecessary for mothers in
low-risk groups. False documentation and
resale by authorized purchasers were a few
of the ways diagnostic centers procured
ultrasounds for illegal fetal sex determina-
tion. In defense, a former senior executive at
GE said blame should be pinned on unethi-
cal doctors, not the machine suppliers. “If
someone drives a car through a crowded
market and kills people, do you blame the
car maker?”39 Sabu M. George took issue
with that comparison. “If comparisons have
to be made,” he wrote in a weblog, “then we
would compare ultrasound machines to
[weapons of mass destruction], particularly
33
Peter Wonacott and Binny Sabharwal, “India’s
Skewed Sex Ratio Puts GE Sales in Spotlight,” New
York Times, April 18, 2007, 1.
34
Sabu M. George, “Sex Selection/Determination in
India: Contemporary Developments,” Reproductive
Health Matters 10, no. 19 (2002): 191.
35
George, 192.
36
George, 192.
37
Wonacott and Sabharwal.
38
Wonacott and Sabharwal.
39
Wonacott and Sabharwal.
M04_WICK7921_01_SE_C04.QXD 6/9/09 12:14 PM Page 132

132 Part I • Ethics and Business

given the ongoing genocide of girls elimi-
nated before birth.”40
GE’s push tactics in selling ultra-
sounds, especially to doctors and diagnos-
tic centers in rural India, were at the center
of a brewing storm. Even in small villages
with no running water, erratic electricity,
and unpaved roads, ultrasounds were read-
ily available. Raja understood the impor-
tance of the social issue GE faced, but he
was also aware of the growing business
the growing discontent among campaign-
ers and the media against the practice of
prenatal sex determination testing using
GE’s ultrasound machines? What addi-
tional efforts did GE need to make to prove
its intentions of promoting prenatal care?
What other efforts should the company
make to stop the illicit prenatal gender
determination and resulting abortions?
How could he protect the as yet untar-
nished image of GE as a responsible corpo-

n
potential that ultrasounds had for GE’s ration going forward?

io
market-leading position in India. How was

n
he to meet the aggressive targets set by
global headquarters? Would he have to step

or 0 at

io
back from his aggressive sales strategy?
How could he, at the same time, alleviate
40
http;//www.edelman.com/speak_up/blog/archives/
2006/12/three_points_of.html (accessed September 8,
2008).

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