When in Rome?

In the Hutong
After a Power Out
2345 hrs

Peter Goodman has written another one of his great features, this time about foreign (American) firms who crack under the pressure of getting China to perform for them, and engage in corrupt practices either directly or through agents.

Goodman was able to get some people to go on record, mostly about cases that are in one way or another a matter of public record. Even the dozen cases he was able to name make it bad enough. He also has people leveling accusations at H-P.

No question, the temptation to take shortcuts in this market can be huge. Pay for a trip for a government official to the U.S. Help his kid get into Yale. Or let your distributor carry a big fat brown paper bag full of cash to a senior government official or a procurement officer. Or even let your P.R. company lay a couple of thousand RMB on a reporter for a sweet story.

But hey, guys. It’s wrong. It’s illegal, immoral, and in the long run damages everyone it touches, even remotely. And here’s the kicker: if you as a corporation can muster the courage to say no, you’ll find you may lose a couple of deals in the near term, but in the long run you’ll do better.

And, oh, by the way. There’s a reckoning coming. That’s right. Sure as a monsoon there is a big bloody s***storm coming that’s going to engulf a lot of companies doing business in this town.

The most politically profitable thing a government official in China can do to fight corruption is to uproot a corrupt bureaucrat or employee of a state-owned enterprise and get them to testify that a big foreign firm made them do it. And then to go after the big foreign firm, make a big public deal, investigate with the SEC and the DoJ in the spirit of international cooperation, slap them with a huge fine or worse, and then shift blame for corruption onto the backs of major multinationals.

So get ready. My advice – start cleaning house now. On your own. Don’t wait for Public Security and the SEC to knock on the door.