In the East, particularly at traditional companies, saving face is important. Saving face means that you don't admit your own mistakes and you don't publicly humiliate co-workers by exposing their mistakes.

This can create management challenges for companies doing business in China. Foreign companies are particularly vulnerable, since a Chinese employee who admits to making a mistake not only shames himself, but also brings shame to his country in front of foreign visitors. As a result, simple problems left undiscovered can easily grow into full-blown crises.

One manager at an international company in Shanghai says he routinely sends foreign employees to give bad news to customers, since foreigners don't get embarrassed as easily. (Some of the people interviewed for this story did not want their names used because "face" is a sensitive topic.)

Technology for transparency

"This is one of the critical areas that we have to face upfront," says How Newseng, general manager at Fairchild Semiconductor Corp. in Suzhou, located near Shanghai. The company's global headquarters is in South Portland, Maine.