Had lunch the other day with a bunch of people I consider to be China experts (to the extent there is any such thing). During our lunch, GSK’s China corruption issues came up and we mused as to what was really happening in China by way of anti-corruption enforcement. The following views were expressed:
- China is serious about corruption and it is starting with the pharmaceutical industry because corruption is so entrenched there. China is going after both domestic and foreign companies, but we are just hearing more about the foreign companies. This is just part of China’s desire to reduce corruption because the Chinese people are really sick of it.
- China is doing what it always does, which is killing the chickens to scare the monkeys. The foreign companies are the chickens and the domestic Chinese companies are the monkeys.
- China is focusing on its pharmaceutical industry because its citizens are unhappy with medical care pricing. Why not go after a high profile foreign company to show the people that the cause of high medical care prices is foreign companies and we the government are aggressively working to solve the problem.
- China is focusing on foreign pharmaceutical companies because it wants to do what it can to level the playing field for Chinese pharmaceutical companies. The pharmaceutical industry is of critical importance for China (both domestically and worldwide) and it does not want foreign companies dominating this industry.
- Nobody really knows where and when the Chinese government will strike next when it comes to corruption. We all just know that it is striking a lot more often than it used to and striking against a much more varied list of companies (the smaller foreign companies that have gotten hit have for the most part managed to stay out of the news).
- If you are a foreign company doing business in China in an industry the government deems important, you should be extra worried/cautious.
- Be careful out there and make sure you do whatever you can not to have your company become a China statistic. For help on that, check out that score check out The Double Standard “Tax” On Foreign Companies Doing Business In China. What To Do?
What are you seeing out there?