Toyota faces charges of corporate bribery in China

14:42, September 21, 2010      

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Toyota Motor Finance (China) was fined by the Industrial and Commercial Bureau of Hangzhou, Zhejiang, for bribing dealers in the region, according to Xinhua.

This is the first commercial bribery fine for both Toyota Motor Finance (China) and Toyota Motor Corp.

According to the bureau, between August 2008 and April 2010, Toyota's auto finance company paid nearly 71,000 yuan to three dealers in Zhejiang Province under the name of "service" and "processing" fees to gain unfair advantages over other car loan programs. The car loan profit it made through the three dealers during this period totaled almost 760,000 yuan, which is about 426,000 yuan after taxes.

Xinhua says one-year loans from Toyota carry an annual interest rate as high as 10 percent to13 percent, compared with less than 7 percent from major state-owned banks; Toyota paid 4.5 percent of the interest it received to the dealers.

Citing China's law against competition distortion, the bureau decided to confiscate the after-tax profit and impose a fine of 140,000 yuan. This, however, may not be the end of Toyota's trouble, because the bureau is reportedly in process of investigating it in several other regions.

Although illegal, corporate bribery is virtually a standard price in the business world of China. By taking on Toyota at this particular moment, the government may be sending warnings to Japan on what it could lose since emotions are running high over a disputed island in East China Sea after Japan detained the captain of a Chinese fishing boat two weeks ago.

(Editor:黄蓓蓓)

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