| Online: | |
| Visits: | |
| Stories: |
| Story Views | |
| Now: | |
| Last Hour: | |
| Last 24 Hours: | |
| Total: | |
China: Stop Complaining About “Selective Enforcement” And Start Obeying The Law
So I got this email way back in May and I loved it and so I immediately used it to create a draft blog post. And then I forgot about it. In fact, now I cannot even remember from whom it came, though I think it came from a good friend of mine and a veteran China hand, who has been living and working in China for the last twenty years and with whom some of our China lawyers are working on a matter.
Anyway, now that I have “found” it again, I just have to run it, so here goes:
Dan,
1. Please tell Chris that I loved his WSJ article on China corruption. You guys are right to always be talking of how foreign companies need to stop bitching about selective enforcement and just start obeying the law. People do not like that message though because they want to be able to blame their own f—ups on some bigger more intractable force.
2. You should send it to _______ [I deleted the name of the company when I threw up the draft] since they are doing everything the exact opposite of what this article recommends.
3. It is like we are always saying about Hong Kong and how in the 1970′s it was one of the most corrupt economies in the world. But then they realized how corruption was corroding their society and their economy and so they created a corruption commission with real power, and now HK is one of the cleanest countries in the world and this clean economy is now a large reason for its prosperity. The same goes for Singapore. Xi Jinping has stated many times that his goal is to run China on the Singapore/HK model.
So what should foreign companies doing business in China take away from what has been happening here of late? The following:
a. “Chinese” can run a clean economy. They can also appreciate the benefit. I have discussed corruption with hundreds of Chinese businesspeople and friends over the years (in Chinese) and most of them hate it and want it to end. I am not saying that my discussions are a representative sample of China, but I do think that they are a representative sample of something even better than China as a whole: they represent China’s business class and since they are the ones doing well, I can only imagine how the peasants must feel about this.
b. The PRC government is serious about the anti corruption campaign and this is NOT because it has suddenly become moral. It is because they believe that they need to do this so that they can maintain their position within China. They see how pervasive corruption can destroy the legitimacy of both the party and the central government. In an unelected government system, some form of legitimacy is required to maintain the power to rule. The fact that they are serious does not mean that they will succeed, but it shows the direction they are taking and will continue to take. Foreign companies do not have networks of patronage, so foreign businesses are obvious targets. But it is simply untrue that foreign businesses are the only target. The current move against Zhou Yongkang and the petroleum cartel group is an indicator that the central government is willing to take the battle up to the highest levels.
4. We can already see the effect here [in China]. I am now working out in ______ [I deleted this identifier months ago as well] with a government operated industrial park. The government officials are quite open about the situation. “We used to be able to act this way (corrupt), now we cannot. We have to be very careful or we will be busted.” In the old days, they would take us out to dinner in a fancy restaurant with copious amounts of baijiu. Now we eat in the office cafeteria. It is serious stuff.
5. And yet, most foreigners are saying, “no, there is no change. It is just a political battle that has nothing to do with normal life in China.” They are echoing what they are picking up at the expat bars or what their Chinese staff back in the United States are telling them. But deep inside they know we are correct and we just need to keep pushing on the right people.
6. The problem we will have is an old one. Many of the local staff (both Chinese and foreign) are invested in doing things the old way. They will work very hard to try to neutralize firms like yours. Those guys don’t know anything about China, those guys do not know how we have to work in this business, and so on. My strategy is to tell the client up front that they should expect to get this push back from the locals. I tell them that this is what the local staff will say. If you are going to believe them, then let’s save money and time and abandon the effort right now. When the locals come back and say exactly what we predict, it enhances our [the email writer's own company] credibility.
7. This all applies to and you should take this into account. [Not sure whether the you is a mutual client or my law firm]
Wow.
Source: http://www.chinalawblog.com/2014/11/china-stop-complaining-about-selective-enforcement-and-start-obeying-the-law.html
