Page last updated at 12:31 GMT, Monday, 29 March 2010 13:31 UK

Murky world of corruption in China

By Michael Bristow
BBC News, Beijing

Bank worker handles Chinese yuan bank notes (file image)
Huge amounts of money can be involved in shady business dealings

Bribery and other forms of corruption are problems often encountered by foreign businesses operating in China.

This can result in companies providing clients with expensive trips abroad, lavish meals and red envelopes stuffed with money.

But not all businesses get drawn into this murky world; some say they abide by the same high standards they observe elsewhere.

And one foreign business advisor said firms that supply good products and services will always do well - even if they refuse to be corrupt.

The use of bribery in the business world in China has come into sharp focus because of the trial involving four executives working for the Anglo-Australian mining firm Rio Tinto.

The four were sentenced in Shanghai to between seven and 14 years in prison for taking bribes and stealing commercial secrets.

But how much of a problem is bribery for foreign firms operating in China?

One British businessman, who did not want to be named, said it was a big problem, particularly in China's smaller cities.

He told the BBC of one occasion when he was trying to set up a joint venture company with a Chinese partner in Shandong province.

Often there is little understanding about China at headquarters and so regional managers hide things
Patrik Lockne

Negotiations had been going on for weeks, without any success, he said. Then, at one meeting, he was asked to step outside for a chat with an official.

"He said all the problems could be overcome - so I asked him how. He said it could be done if I gave him 1m yuan ($146,000: £98,000)," said the businessman.

Patrik Lockne, an advisor for a Swedish consultancy, said one common problem was a lack of communication between a firm's main office and its China branch.

Foreigners working in China are sometimes tempted to adopt local norms of behaviour in order to get work done, he said.

"Often there is little understanding about China at headquarters and so regional managers hide things," said Mr Lockne, who works for Springtime.

'Moving on'

Something like this appears to have happened at Rio Tinto.

The firm believed in its employees' innocence when they were first detained last July, saying the bribery accusations against them were "wholly without foundation".

Rio Tinto office in Shanghai, China (file image)
Rio Tinto was quick to deny it had any knowledge of its employees' actions

At that time Rio Tinto said its workers had acted in accordance with the company's strict code of conduct.

But following the verdicts on Monday the firm said the four had been conducting their own illegal activities "outside our systems". It has now sacked them.

But not all foreign business people operating in China get tempted to do something unethical - and possibly illegal.

"I hear about it and I'm sure it happens, but I think it's the old way of doing business - times have moved on," said Rupert Utteridge, who runs the Australian telecom company Digital Techniques.

"We take people out for meals, but I would do that in Australia or Hong Kong," he added.

And, ultimately, building a successful business in China might simply be down to providing good products and services.

"There is corruption in China - of course there is," said Brian Outlaw, executive director of the China-Britain Business Council, which advises firms wanting to set up here.

"But companies can maintain their ethical codes. They can build in exactly the same way as anywhere else - and still be successful," he said.

Print Sponsor

Four Rio Tinto executives jailed
29 Mar 10 |  Business
Rio Tinto group 'admit bribery'
22 Mar 10 |  Asia-Pacific
Rio Tinto trial closes its doors
23 Mar 10 |  Asia-Pacific

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