For those who have missed it: corruption is high on China´s hitlist for the past year, just ask executives at pharmaceutical companies. Author Paul French argues in Ethical Corporation the crackdown on foreign firms could have been expected, and will last.
Paul French:
It used to be argued by bullish chief executives of multinationals operating in China that you didn’t need to worry too much about ethics in the “Wild East”. Ethics were alien to Chinese business culture: the government would tolerate anything that brought in investment and created jobs, and HQ back home would turn a blind eye if you kept the cash rolling in.
It was a popular trope with those who believed themselves omnipotent and untouchable in China, arguing vociferously that weak rule of law, fungible regulations, pliant officials and unrepresented workers was a much better recipe for commercial success than all those pesky regulatory compliance officers and ethical guidelines.
Perhaps it would be good to ask Mark Reilly, former China chief of pharma giant GSK, what he now thinks about ethics, regulation and long-term profits? As we commented in 2013, the scandals at GSK in China were a mixture of “grey” areas, loose regulation and legal weaknesses. Now, more than six months later, Reilly and two local GSK executives, Zhang Guowei and Zhao Hongyan, have been charged with corruption – accused by China’s Public Security Bureau (PSB) of bribing doctors to prescribe GSK pharmaceuticals.
The charges could lead to life sentences for the accused. GSK says it is cooperating with the PSB. Foreign business in China has declared itself shocked – the American Chamber of Commerce in Shanghai says it is “surprised at the strong response”.
But should they be surprised? And should they not all look at their own practices?
Paul French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.
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