I gave a talk yesterday at a China seminar on litigating against Chinese companies in which I discussed suing Chinese companies in China. At one point, while musing about the cases my firm has overseen in China I remarked that I was not aware of any cases having been decided based on corruption. I then riffed on how we also had never once been hit up for “extra” fees when registering a company or registering IP or registering anything else.
I then talked of how corruption in China is somewhat overrated in that China is usually ranked in the high middle of most world corruption indexes, but with respect to foreigners should perhaps be ranked even higher. I said this because corruption involving foreigners is way lower in China than it is involving Chinese citizens.
I then mentioned how in one country in which my firm does a lot of work, we are often asked for extra money to “expedite” our filings, which is really code for telling us that if we do not pay this extra fee, our registration will languish in a corner for an extra six months. That country does extremely (almost shockingly) poorly in the TI ranking.
Upon further reflection, however, this domestic-foreign dichotomy is probably true in many other countries as well, as I know that to be the case in at least a few other countries as well. After the seminar, I went out with a couple of the speakers and one of them, a very experienced China practitioner, revealed that he too had never been hit up for a bribe.
We then talked though of how foreign companies must still be very much on guard for corruption but our focus from that point forward was on one’s own employees. We talked of examples we had seen of companies being asked to give kick-backs in buy-sell transactions and of China-based companies of which we were aware whose existence pretty much depended on shady dealings.
So I am not saying corruption is not an issue for foreign companies doing business in China, as it obviously is. For more on that, check out “The FCPA And China. Do I Need To Get All Loud On You?” But when it comes to handling China’s legal formalities, I ain’t seeing it.
And apparently I am not alone in this.
Transparency International just came out with its 2010 Corruption Perceptions Index and China does fairly well in it (again). Denmark, New Zealand, and Singapore come out tied for least corrupt — no big surprises there. Canada is number 6, Hong Kong 13, Japan 17, the United Kingdom 20, Chile 21, and the United States 22. Maybe I am too close to see things right, but I find it very difficult to believe Japan is less corrupt than the United States, but whatever. Taiwan is 33, South Korea 39, Macau 46, Malaysia 56, China and Thailand tied at 78, India 87, Indonesia 110, Mongolia and Vietnam 116, Philippines 134, and Cambodia, Russia, and Laos at 154. For an interesting (and scary) article on what it can be like to practice law in Russia, click here.
Without nit-picking too much, these numbers seem very roughly accurate to me.
What do you think? Any real surprises here?