Tackling corruption in China and elsewhere is an important issue because the temptation of corruption increases when economic times become more difficult.
President Xi’s Tiger and Flies anti-corruption campaign was widely derided in the West as a cover for purging Xi’s political opponents. This is correct in some cases, but this analysis ignores the impact of this prolonged campaign on the flies that hover around business.
As an example, covid exposed some corruption in the health-care sector. As a result, there is the biggest crackdown on corruption in the history of the industry. It goes beyond the under-the-table payments to health staff to ensure priority treatment. The investigations extend down the pharmaceutical and health equipment supply chains.
At least 177 hospital bosses and Chinese Communist party secretaries have been placed under investigation this year. The National Health Commission said the campaign would focus on people who had used their position to procure kickbacks and corruption in the pharmaceutical sector.
More broadly, in the first six months of 2023, nearly 2500 people have been investigated by the National Supervisory Commission. More than 1600 people have been punished.
The health sector is the particular focus, but in the background there is a wider focus on all aspects of business activity that have the potential to diminish the prosperity and wellbeing of ordinary people, the LaoBaiXing – old one hundred names. This heightened awareness is something business needs to be aware of in operating in China.
We are not suggesting that any readers of TerritoryQ are involved in any of these corrupt practices. What we are noting is that the tigers and flies campaign is aimed at reducing corrupt practices. Businesses acting legitimately may be inadvertently caught up in investigations through no fault of their own. Protection comes from meticulous recording keeping and compliance so that accurate evidence can be quickly supplied.
Corruption takes many different forms. Some is overt and easily recognised. Other forms are less obvious and they quickly fade into the same grey areas occupied by the billion-dollar lobbyist industry in the US and Australia.
Here’s a guide.
• Extra payment for special service.
• Asked to pay for “special” service but service not delivered.
• Pay for a product/service, but a different product/service delivered.
• Asked to pay extra for superior product placement.
• Different pricing for same product/service depending on perceived status.
• Same law is swiftly applied in some instances, but very slowly or not at all in other instances of the same offence.
Corrupt practices or not? On the surface many readers will point to these as examples of corruption.