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Don’t Bribe (But Do It In Person)

Further to our recent post on bribery [1], we noted the following on Danwei [2]:

The (sort of) moral of the story is that “paying out bribes is likely to backfire, and if you must curry favor with the authorities to get your business off the ground, make sure you do it in person”.

While we do not recommend or support bribery, the development of legitimate relationships and guanxi [3]is certainly still important – and the last point rings true in that context too: “make sure you do it in person”. Too often we see businesses in China relying 100 percent on their local MD or advisor. Only when that person makes unreasonable demands (aka blackmail) or leaves (sometimes under a cloud) does the overseas management realize that they have no links of their own with key officials, clients, suppliers, or even other staff.

Danone / Wahaha [4]is a case in point, but we have seen it in a lot of cases that do not make the papers – a GM who hid real suppliers behind a series of shell companies so that his foreign bosses did not even know who the real suppliers were, or a joint venture where a staff member tried to blackmail the foreign owner, in relation to “issues” they had not been aware of, in order to avoid being fired, and so many more…

If you do not own the relationships, then ownership of the business can become a whole lot more difficult…so invest in those trips to China, and enjoy the food, karaoke – and friendships – that can result.