Doing Business In China: 25% Of Companies Avoid It Due To Corruption, New Survey Says

on February 12 2014 12:04 PM
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Doing business is tricky in China, the newest survey of international companies says, and as much as 25 percent of those surveyed avoided doing business in China altogether for fear of corruption.  

The survey, which was conducted by international business advisers AlixPartners and covered China for the first time, interviewed lawyers and executives of multinationals involved in compliance and found 25 percent avoided China and the Middle East for fear of corruption, while 39 percent avoided Africa, the South China Morning Post reported on Wednesday.

"The risk of corruption in China has risen due to such factors as the increased focus by U.S. and British regulators, combined with the slowdown in China and the increased Chinese government focus on foreign and domestic entities in food and product safety as well as on the pharmaceutical industry," said Mike Murphy, the managing director of AlixPartners.

Overall, 41 percent of the respondents said corruption was unavoidable in China, while the same figure for Southeast Asia came to 54 percent, with Indonesia, the Philippines and Vietnam getting special mentions. About 80 percent of the executives at Asian companies said their industries were exposed to significant corruption risk.

"This research shows bribery and corruption are on the radar at many Asian companies," Murphy said, according to the South China Morning Post.

An older survey, by the risk consultancy Kroll, reported that 80 percent of the 901 surveyed companies reported exposure to fraud in China between 2012 and 2013, up from 69 percent a year earlier. About 20 percent of those companies said they were highly vulnerable to corruption and bribery in the 2012 to 2013 period, a huge leap from the 6 percent in the 2011 to 2012 year.

One of the biggest corruption and bribery scandals uncovered in recent years involved British drugmaker GlaxoSmithKline, which found itself at the center of a Chinese government investigation in 2013. 

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