Bribery in China as Wasted Money

I love when someone else writes “our” blog posts for us and that is certainly the case today. I received the following email asking me to write a post on bribery in China. Thing is, the email is the post and here it is (without a single word changed except for lining out the specific province):

I’ve been a regular reader of the China Law Blog since sometime in the middle of my company registration process and while maybe 90% of what you write isn’t specifically relevant to me, it’s all interesting and some of it has been relevant for other people I know.

I’d like to request a post on bribes, bribery, and not giving bribes.  I recently got into (and then carefully extricated myself from) a conversation with a fellow foreigner at a casual house party. Said foreigner was complaining about the inherent inefficiency of the _______Province government, the venal greedy nature of officials in _____ Province, and so on.  He just got hit up with yet another request for the red envelopes that are “necessary to doing business in China”.

I’ve never paid a red envelope. I’ve never been outright asked to give a red envelope. The one situation which I was absolutely certain was leading towards a request not only ended up with the official paying the bill at the expensive restaurant but also the comment that he appreciated that I said things like “please”, “thank you”, “sorry”, and treated him and his staff like human beings.

The particular foreign businessman who is giving bribes and loudly complaining about venal officials who ask for bribes is one of a number of a foreign businessmen I know that is giving bribes.  In every instance that I have accurate firsthand knowledge of a foreign businessperson giving grease payments to speed things up, things have taken significantly longer.

In his particular case, with a bilingual team of Chinese staff to help him out he has taken over a year to complete paperwork that I did
— completely on my own — in about 8 months.

In another case I know, after multiple failed attempts to go through the back door, the end result was to do things by the book rather than by guanxi and red envelopes.

In a third, the payment of bribes to some officials followed by the eventual decision to stop paying bribes to anyone led to “unfortunate delays” and “misunderstandings” from the un-bribed (or insufficiently bribed) officials’ departments.  Without going into too many details, that’s why the event no longer exists.

Of the Chinese businesspeople I know who have specifically told me about situations where they have given expensive gifts it sometimes works to their benefit and sometimes has no obvious result.  However, unlike foreigners doing business in China, they are working from within a system that they grew up in.  One presumes that they know whose palm to grease and how to do it.  That or they only tell stories about the times that it worked.

All of the foreigners I know who have given bribes have done so at the advice of their Chinese partners of staff.  Most of the foreigners I know continue to believe that bribes have helped them get more done more quickly in a corrupt system.  However, it’s clear from talking to them and comparing their experiences to the “clean living” lifestyle practiced both by me -and- a small handful of other foreign businesspeople I know that they are not only not gaining an advantage from bribing but are possibly setting themselves up for a pattern of repeat extortion.

Yup. I completely agree. I am convinced there are companies that almost want to pay bribes so they can act like they “really know the system.” I am also convinced there are companies that make clear from day one that they will never under any circumstances pay a bribe so don’t even bother asking. Which of those two types of companies becomes most susceptible to being hit up for a bribe? I am not saying all companies can function in China without paying a bribe at some point, but I am saying that most foreign companies can and do function in China just fine without ever paying a bribe. I am also saying that those companies that pay bribes put themselves at risk.

What do you think?

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