Bribe case casts shadow on foreign firms

09:38, July 07, 2010      

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A pedestrian walks by the Siemens headquarters in Beijing. The company was fined $1.3 billion in 2008 for offering $23.4 million in bribes to Chineseofficials and public hospital doctors. Photo: CFP

Analysts and experts said China should write new rules to ensure that companies conduct business properly in China and to create a level playing field for enterprises given recent allegations that several foreign companies were involved in corruption and bribery.

For a long period of time, foreign companies in China have tried to differentiate themselves from their domestic counterparts by highlighting efficiency and integrity. However, there are concerns now about whether foreign companies could remain corruption-free after reports surfaced that Johnson &Johnson reportedly bribed people in China.

Experts said the business approval process in China is centralized and just a handful of people control power.

As a result, large domestic enterprises have pushed foreign companies to offer kickbacks to get ahead. Due to the lack of supervision over foreign companies, the situation may turn serious.

"International firms in China are facing a big challenge and are in a dilemma about whether to do as the Romans do (bribing others) or to maintain their baseline of legitimate business," Wang Zhile, director of the Research Center on Transnational Corporation, Ministry of Commerce, said in an interview with China Business News in April.

Slow process

Johnson &Johnson Medical (Shanghai) Ltd allegedly bribed Zhang Jingli, former vice director of the State Food and Drug Administration (SFDA) who was removed from the post for corruption on July 13.

Zhang helped with drug applications and medical product registration, the Democracy and Law Times, a newspaper under China Law Society, reported Monday.

The company denied the allegation, and said they have contacted the related authority for an explanation.

"We have no idea of the investigation or about the official bribery case the media reported recently, neither have we ever received any information about the case from the authority," Jiang Ke, the company spokesman, told the Global Times Monday.

Despite the denial, the report has triggered concerns about the integrity of foreign companies in China.

"Bribery comes from the complicated and sluggish administrative approval process," Ma Guangyuan, a famous financial commentator and economic observer, told the Global Times.

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