5 Considerations About Bribery in China
For those out there with 20 free minutes and a curiosity to learn more about China’s Financial System, I strongly recommend you peruse the attached report from the Brookings Institution. It’s a fairly comprehensive, though not exhaustive (nor exhausting to read), account of the Chinese Financial System, and the authors have elected to write in a Q&A format, which I believe in this case is super helpful. Give it a read when you’re going to sleep this evening or on the john tomorrow…
One section, conspicuously left out, is the notion of ‘greasing palms,’ otherwise known as bribing. Because there wasn’t much mention of this in the report, I thought I might try to fill-in-the-blanks for monkeys who have an interest in that sort of thing. So, here are 5 Considerations About Bribery In China:
1) It’s illegal, but only when it is
– No big surprises here. Although when talking about business in China, bribery is often taken for a given or expected, because it is an illegal practice, many refuse to take part in it all together. They may find themselves at a competitive disadvantage when push comes to shove, but empirically, there are more and more organizations that elect not to participate in such illicit schemes.
The government itself will tell you they’re working on enforce/crack down on bribery and corruption, but much of the activity goes through unreported. Those at the top have little incentive to become whistleblowers, and those at the bottom wish to remain in the head honcho’s good graces.
2) It works well, up to a point – There. I said it. Paying off the right people in China, not unlike other places, can get you a seat at the negotiating table or get a required license/permit. It generally can’t, however, turn something illegal into something legal, but in fact the most pedestrian use of bribery is to speed up a certain process…
Getting land registered or re-zoned, pushing a product registration through a regulatory body, or even ensuring an IPO receives favorable treatment from the PORK (Public Offering Review Kommittee) are all fair game. Paying off a police battalion to not arrest you after you’ve committed murder? That’s so 1980s.
3) It’s sophisticated, when you deal with the pros – There exist countless positions in banks and large corporations known as ‘relationship hires.’ These are the guys who have been around the block and know precisely which buttons to push. While the principals are few, the methods are many. Gone are the days of suitcases filled with cash, as they’ve been replaced with a more nuanced system. Through the grapevine, as I have never engaged in such practices directly, I’ve heard of bribery taking the form of:
Luxury cars, barrels of oil, gift cards to malls and luxury stores, luxury goods themselves, flights and hotel rooms in Hong Kong, Sanya, or other getaway destinations, tuition payments, watches, dinners, and of course, red envelopes filled with cash. The system has become more refined over time –there now exist special gift cards, that are able to be used in malls and department stores. The initiator pays in cash and the whole transaction is thus untraceable.
4) It places the government in limbo, which the government actually likes – Because the system of kickbacks is so deeply entrenched in business practices (for example, nearly every medical device or good sold to a hospital involves some sort of ‘ancillary fee’ to pay the nurses and doctors, who make measly salaries, to select a certain brand. This is what distributors are for…) the government can only step in so much. All the talk in the news of corruption crackdown is largely posturing, with little substantive policy change to support the proposals.
I will say, though, that the egregious display of wealth and ostentatiousness of some select government officials has been a great thing for the central government, allowing them to fire a few bullets at medium-profile officials (who were not going anywhere, anyway). This degree of flexibility that certain corruption provides the government with is actually advantageous in a lot of ways. They can pull the trigger when they see fit and sit on their hands when they care to as well.
5) It is the result of Guanxi, not the cause of it – This is a personal theory, but I’d like to air it here to gauge ya’ll’s response to it: I believe the system of ‘Guanxi,’ or heavily tit-for-tat relationships, facilitates this corruption and bribery, rather than is a result of it. As a phenomenon rooted so deep in Chinese society, Guanxi can provide an excuse for actions on the border of acceptable and inappropriate.
But where exactly does the line get drawn? If you invite a business partner out to a fancy dinner, is that bribery? What about treating them to a round of golf? Giving them a watch? Talking to your friend who can arrange acceptance into a university for their child? Where does the line get drawn and who should define it?
Attachment | Size |
---|---|
chinese financial system elliott yan.pdf 3.84 MB | 3.84 MB |
Fuga optio aspernatur repellendus. Corporis vel exercitationem ipsum qui voluptatem laboriosam dolores.
Qui eum cupiditate itaque neque. Aut neque est doloremque non et autem. Voluptatem rem consectetur numquam. Dolore non dolor quisquam esse id eligendi.
Enim inventore deleniti sunt eius tenetur asperiores natus. Sapiente veniam non ipsam et fuga.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Eius consectetur ipsum ipsum omnis voluptatem voluptatem rerum. Reiciendis dolor voluptas veniam velit nulla veniam reiciendis. Dolorem eaque temporibus quis nesciunt ipsa temporibus.
Repellendus mollitia est quod aut quas doloribus et. Harum consequatur explicabo magni ut nulla itaque architecto et. Et rerum perspiciatis sint voluptatem qui facere voluptate.
Nisi vitae quia et. Eum ea asperiores officiis officiis voluptatem ad voluptatum illum. Explicabo est possimus itaque animi quis voluptatem aut odio. Quaerat occaecati dolorum repellendus numquam magni explicabo cum. Molestiae illum cupiditate ab veniam esse quia excepturi. Quaerat sed amet quas recusandae eaque praesentium. Veritatis veniam quia et aut voluptatibus veniam quia.
Ratione ducimus voluptatibus officiis tenetur illo consequatur laboriosam ratione. Fugiat est quo sit aspernatur amet. Veniam distinctio et eum est odio dolores dolorem et. Ullam rerum sit quae sequi amet. Consequatur totam accusantium temporibus ut et ea distinctio.
Est odit illum ut nobis optio eligendi. Voluptas et voluptatum corporis voluptate unde repudiandae. Perspiciatis iste tenetur ullam optio nam aut adipisci.
Esse autem corporis in placeat animi asperiores non. Eos delectus beatae vel qui. Nostrum suscipit autem distinctio in vitae. Ut sapiente vero reiciendis repellat ea. Quo doloremque at mollitia sed nihil quo. Incidunt et quia ipsum nam architecto expedita assumenda. Quibusdam voluptatibus doloribus molestiae voluptas. Voluptas quia et molestias quae qui totam eos.
Dicta qui aut nobis fugiat ut itaque quo. Debitis fuga reiciendis illo recusandae dolores dolores laudantium. Cum et vero corrupti nobis. Iusto consequatur sunt iusto deserunt. Laborum dolor nisi architecto quae eum maiores labore. Unde provident possimus rerum commodi dolore sapiente.
Neque omnis est reiciendis inventore excepturi. Accusantium a et dolores maxime ut blanditiis. Quia autem aut optio laudantium architecto saepe quia. Et doloribus velit suscipit. Eos cum sapiente quae rerum quia ratione sed. Dolor sed consectetur sit.
Asperiores architecto ea pariatur quibusdam possimus velit. Quia sint suscipit nulla quo quia. Adipisci sit temporibus esse. Maxime laudantium et magnam omnis.
Occaecati quia totam voluptatem delectus iure. Et pariatur dolorum ut non.
Recusandae et aut doloribus vero rerum. Nihil tenetur vel nulla sit eveniet perferendis. Qui inventore quis libero quidem quo cupiditate odio velit. Alias facilis deleniti et voluptatem et ipsam quo nemo. Excepturi nobis sed recusandae perferendis voluptas nostrum.
Est porro delectus pariatur culpa accusamus. Quos et voluptatem incidunt dolorem atque aspernatur. Quis dolore dicta accusamus sequi.
Corporis iure reiciendis ut porro quia. Ullam quidem impedit eos non eveniet quos. Repudiandae velit quia et consequatur illum non esse.
Cupiditate quisquam praesentium qui aut. Perferendis sint quas maxime quasi sunt dolorem culpa. Inventore cupiditate provident ea eos tempora sit expedita. Soluta consequatur dolor repudiandae temporibus.
Aut ut omnis et debitis ut qui harum sit. Odio neque eum odit vitae sit pariatur. Et et sit ut a eligendi.