Doing Business in China For Dummies®

Combating Corruption

Corruption isn’t nearly as pervasive in China as many in the West portray it to be. However, as in any other country, it does exist. The Chinese government even recognizes this fact. As in many countries in the world, it’s been going on for a long time.

The good news is that China’s leaders are working hard to decrease the amount of bad stuff that happens around shady business dealings by dismissing even high-ranking officials suspected of behaving inappropriately. Unfortunately, there’s a lot more work to be done.

No matter how your competitors act or how disadvantaged you feel, make sure you play by the rules. Keep in mind that in addition to breaking Chinese law, you may be breaking your home country’s laws any time you get caught up in corrupt practices. In this section, we discuss bribery and how to avoid it.

Understanding bribery laws

For most people, there’s no safe haven for violating another country’s anti-corruption laws. The U.S., for instance, enacted the Foreign Corrupt Practices Act (FCPA), which applies to U.S. persons and companies as well as those doing business in the U.S. If you’re not based in the U.S., your home country probably has a similar law. The gist of the FCPA is that if your company (or you as an individual) attempts — even unsuccessfully — to bribe an official of another country, you can face significant fines and/or jail time.

The FCPA and similar laws impose a duty to perform due diligence on third (nongovernmental) parties ...