China Business

China Prostitutes are Trusted More Than Chinese Government Officials

China real estate bubble

A recent survey of more than 3,000 Chinese citizens found that 7.9% trust prostitutes, considerably more than trust Chinese government officials.

As one would expect, this survey has received considerable blog play:

Most of the posts focus on how the same results would be likely in the United States. I agree, but this post is going to be about business, not politics.

I thought of this survey today in the context of a China legal matter some of the China lawyers at my law firm recently wrapped up. I am going to have to be fairly vague here to avoid revealing anything that could tag anyone, but here goes:

American company “buys” a building in a Chinese second tier city with plans to convert it to an office building. The building/land had been set up for a very limited use and that use precluded foreign “ownership” and it also precluded its use as an office building. But the American company bought it anyway, based on assurances of “top local officials” that “all” would be okay.  In fact, the American company relied entirely on these official assurances and it never conducted its own due diligence on the property.

Right before the American company is about to start on the building conversion, the local Chinese government officials tell it that the “mood” in Beijing has changed and the American company must sell the property back to the local government. The American company hires my law firm to assist. Our China attorneys tell the American company that their office building plans clearly violate the law and that their best option is to try to get a full refund on their “purchase.” Negotiations ensue and the American company actually gets its entire purchase price back, limiting their loss to their time, legal fees, travel expenses, etc.

This is just one of countless examples of instances where foreign companies have relied on assurances from Chinese government officials to their detriment. I could detail many that have ended far worse than this one but I like this one for how it illustrates why it is better to rely on a more stable law than on a less stable (and trustworthy) official.

2 responses to “China Prostitutes are Trusted More Than Chinese Government Officials”

  1. Salacious and escandaloso, but a dubious link to a property zoning issue. Nevertheless, not bad for a Saturday.

  2. You seem to be saying that a foreigner in China is more likely to receive the benefit of his bargain from a prostitute than a cadre. Noted.

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