A Tale of Two (Sealed) Bids

Related entries: Business Issues, General, Risk & Law

Corporate corruption, both foreign and local (here and here), has been in the news recently in China, so it was with interest I heard the following tale (which has been edited for obvious reasons).

Two major international companies submitted sealed bids for a contract to supply another big firm in China. The first company (Company A) submitted the bid according to the defined schedule…the other one (Company B) then reportedly delayed submission, before finally submitting…a slightly lower bid. Coincidence?

An insider let it be known (unofficially) to Company A that their sealed bid had been opened and disclosed to Company B, and that Company B then revised their bid to beat Company A’s.

Is all fair in love and business in China? Given the spate of corruption probes against foreign companies (let alone local ones) such activities (and the “agreements” in place behind the scenes) could be seen as dangerous as well as devious. And as the defined procurement process was not followed, it cannot be argued that this was simply a case of benefiting from “business intelligence” (though, properly used, that can be a very valuable tool).

It may well be that the senior management at the buyer company knew nothing about these activities. Maybe they should have, or maybe they did. But to be on the safe side, it would be a good idea to ensure that corporate policies on such issues are clear, and that training is combined with an occasional audit to make sure that the systems are working properly.

But let’s remember that the problem with corporate corruption is not an exclusively Chinese one – as recent news from Germany, France and the UK (to name and shame just a few) shows only too clearly.

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