Foreign graft on the rise

By Ji Beibei in Beijing and Chen Xiaoduan in Shanghai Source:Global Times Published: 2011-4-15 17:32:00

Foreign enterprises say they are optimistic about the investment environment in China, despite another case of a multinational giant being found guilty of bribery and embezzlement.

The past few years have seen a growing trend of corruption by multinational ventures in China, according to an earlier research paper issued by Anbound Group, a Beijing-based consulting firm. 

It showed that out of 500,000 corruption cases investigated in the country in the last 10 years, 64 percent are related to foreign businesses, the Shanghai-based National Business Daily reported earlier, with IT and medical-related industries the biggest offenders.

On April 8, Johnson & Johnson was fined $70 million by the US Securities and Exchange Commission (SEC) and the Department of Justice for handing out commercial bribes in various countries, including those in Europe and China, between 1998 and 2006.

"Comparatively speaking, Chinese attach more importance to connections, which offers chances for corruption and embezzlement," Huo Jianguo, an expert with the Chinese Academy of International Trade and Economic Cooperation, told the Global Times Thursday.

The US introduced the Foreign Corrupt Practices Act in 1977, aimed at supervising the business operations of American companies in foreign countries. China has not established similar laws, Huo said.

However, many foreign enterprises that attended an anti-corruption summit in Shanghai Thursday expressed optimism in the investment environment in China and said they found it has made greater efforts to fight corruption in recent years.

"The actual corruption situation in China may be much better than China gets credit for," Steven Maloy, general counsel from General Electric Asia Pacific Region, told the Global Times.

Chinese authorities have attached growing importance to fighting corruption by foreign ventures.

"We've seen more and more people from high levels of government, such as the Ministry of Supervision, who frequently join our seminars on implementing monitoring mechanism programs in China," said Aili Zhao, vice president and regional compliance officer with Siemens China.

According to the World Economic Forum Global Competitiveness Report 2009-2010, corruption features as the sixth largest constraint on foreign investors in China. 

However, foreign investors are not being scared off. In fact, China is still considered by many to be an attractive investment destination.

Posted in: China Watch

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