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1、Corruption Law and Practices in China: Implications for Business Management of Foreign EnterprisesWiboon KittilaksanawongSchool of Management, Zhejiang University, Hangzhou 310058Abstract: The number of foreign companies doing business in China has increasingly grown each year. While the legal juris
2、prudence in most developed countries mostly strives to make the statutory language clear as to what conduct is prohibited and what is allowed by law, Chinese statutes are often structured along with Chinese social norms, customs, mores, and regional interpretations. Foreign businesspeople and their
3、legal counsel in China under such legal environment have increasingly faced the dilemma of international bribery associated with the Chinese corruption law and practices. Despite Chinese government has been working very hard to curb corruption, a number of initiatives remains not fully effective due
4、 to the potentiality of undermining the supremacy of the ruling communist party and the use of corruption as a method of compensation to serve the partys economic and political goals. This paper discusses the Chinese corruption law and associated dilemmas viewing from the government and the business
5、 through the mechanisms of measuring and monitoring of the economic performance. Essentially, the paper provides recommendations for the foreign companies to sustain and grow their business in China.Keywords: Corruption Law, Business Management, Foreign Companies, China1. Corruption in China and Its
6、 Severity The number of foreign companies doing business in China has increasingly grown each year. Their business people and legal counsel have increasingly faced the dilemma of international bribery. While the legal jurisprudence particularly in North America and Europe strives to make the statuto
7、ry language clear as to what conduct is prohibited and what is allowed by law, much relevant information is simply assumed in China 1. Chinese statutes are often very general and broad and meanwhile the statutes lack clear definition of key terms. Nevertheless, the violation of Chinese statutes is p
8、otentially involved with very harsh penalties. Chinas laws are structured along with Chinese social norms, customs, mores, and regional interpretations. Gift-giving for example, is very common and is regarded as an acceptable practice in China. However, each individual Chinese agency has its own int
9、ernal rules and regulations regarding the receipt of gifts by its officials. These rules and regulations may require that gifts be either reported for further handling or prohibited. The issue of improper gift-giving in China is addressed in the criminal law and predecessor regulations 2. The Chines
10、e government officials are required to limit the gifts giving to foreign guests and particularly, officials receiving gifts in the form of cash and securities are strictly prohibited. A violation of the anti-corruption law associated with bribery, concealing illegal gains, tax evasion, and embezzlin
11、g funds, is a capital offense and potentially punishable by death. The law also includes for example, the issuance of employment permits to foreign personnel, the collection of inappropriate fees, the abuse of authority in the issuing of permits, or the fraudulent issuance of permits which are regar
12、ded as criminal acts and are subject to imprisonment or significant amount of fines.Research of corruption in China and its severity is very difficult in attaining high quality, reliable, and standardized survey data. Nevertheless, data from various sources have consistently indicated that corruptio
13、n is one of Chinas top political challenges and social problems 3; 4. The press reports also highlight that the monetary cost of corruption has grown while the involvement by mid- and senior- level officials has increased as well. Combating corruption is one of the most difficult tasks as its associ
14、ated processes and subsequent results potentially undermine the supremacy of the ruling communist party. The governments increasing anti-corruption measures, however, remain ineffective, lacking sufficient enforcement and transparency with respect to the inspection and operation procedures which fur
15、ther complicates how allegedly corrupt officials are handled and disciplined. The available data on the punishment of corrupt officials indicated that only less than three percent of these officials actually received jail sentence, hence making committing corruption a high-return but low-risk busine
16、ss, and thus continuing a very serious problem in China 3. Such corruption is estimated to be about three percent of the countrys annual GDP and it is concentrated in critical sectors such as infrastructure projects, financial services, real estate, and government procurement with extensive state involvement. The investigation results by the national audit agency also pointed out that misappropriated and misspent public funds, including overstating the number o
