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Western firms, practice what you preach

By Yao Ying (China Daily)
Updated: 2009-08-13 07:45

Orange trees south of the Huaihe River bear big and sweet fruits. Cross over to the north, and you'll see trees with identical trunks, branches and leaves, but the fruits? Well, your eyes will tell you they are smaller, and your taste bud will react bitterly to their sourness. Why this difference? They're different because the soil on the two sides of the river is different.

This tale comes from Yan Ying, a Qi state politician during the Spring and Autumn Period (770-476 BC) more than 2,500 year ago, and may explain why multinationals' behavior is different in the West and China.

US label maker Avery Dennison admitted last week that it had bribed research institutions and authorities in China to win business contracts. But Avery is not the only foreign firm involved in a scandal in China. Heavyweights such as IBM, Wal-Mart and Lucent have grabbed the headlines for all the wrong reasons, too. The least said about Rio Tinto the better, four of whose employees were arrested on Tuesday on charges of stealing State secrets and bribery.

A survey by Anbound, a Beijing-based consultancy company, shows foreign companies were involved in 64 percent of the 500,000 corruption cases investigated in the past decade. Foreign firms offer Chinese officials luxury sightseeing tours disguising them as business trips, pay huge tuition fees for their client's children to study abroad, and offer free business training sessions to get business information or gain swift official approval for projects.

Why these foreign business giants, which swear by ethics and business integrity in their own countries, use indecent means to get what they want in China? Are they indulging in double standards, or are business practices in China really corrupt and they are just playing by the "rules" to succeed?

In China, like in other large markets, foreign companies learn quickly to use everything, including hidden rules, for success. For them, bribes offer a shortcut to winning a contract or getting business information.

Capital, by its very nature, will tend to increase, even at the cost of dirtying its handler's hands. And capital is at the core of any business. But business, too, has a river that divides the sweet fruits from the sour ones, and that river is ethics. And in business, many an ethical issue is actually a legal one.

Multinationals maintain the highest ethical standards in the West mainly because the laws there are stricter. But once they are in countries like China or India, they start using the legal loopholes to bribe their way to success. This is specially so when they are dealing with companies which enjoy a monopoly status.

Many Western countries have made bribing or taking a bribe a crime. Avery Dennison, for example, was compelled to report the case to the Securities and Exchange Commission and the Justice Department because of such a law in the US, and agreed to pay a fine of $200,000 for its actions. Isn't it surprising to see Avery report the case only to the US when the scandal took place in China? We're anxious to see what kind of punishment China hands down to the guilty - people who took as well as gave the bribes.

The way this case is handled by Chinese authorities could be an example of how to do a complete house cleaning, which has to be done in the interest both of China and foreign companies.

The West always criticizes China for not following rule of law strictly. But what does it do when Western firms seize every opportunity to break the law? Why don't these foreign firms stop playing with the law?

(China Daily 08/13/2009 page8)