Stanley Lubman, an esteemed Chinese legal scholar, now at UC-Berkeley, wrote an excellent piece this week for the Wall Street Journal’s ChinaRealTimeReport. The article, entitled, “Stanley Lubman: Business in China: What Does ‘Playing by the Rules’ Mean?” sets out the dilemma faced by foreign businesses operating in (or with) China: Can they “do business in China without violating the law?”
I recommend you read the whole article, but if you choose not to, at least read the conclusion below:

In an era when the Chinese market is increasingly important to many global businesses, some over-eager participants may be tempted to bend the rules for fear of being “left out” or missing a good opportunity. They should resist the temptation, and heed McGregor (p. 122), who notes that many foreign companies “have policies of zero tolerance for corruption in China, and still do good business because their products are the best and in demand.”

I buy that.