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Commonsense Anticorruption Tips for Doing Business in China
Last month, the Chinese government accused U.K.-based pharmaceutical giant GlaxoSmithKline of illegally ramping up its prices and bribing healthcare providers to buy the company’s drugs. The ensuing probe into GSK could herald the end of China’s status as somewhat of a Wild West for overseas consumers, with few checks on corruption and regulation, said Zaldwaynaka Scott, co-chair of Kaye Scholer’s white-collar litigation and internal investigation practice.
“People are used to seeing aggressive enforcement from the U.S., but it’s not something you see turned on a multinational company in China,” Scott told CorpCounsel.com. She recently outlined "Ten Steps to Limit Corruption Allegations in China,” to help U.S. corporations doing business there.
The tips include understanding China’s laws and providing compliance training to employees. Those steps might seem intuitive, Scott says, but in order to avoid problems like the ones now facing GSK, it’s important to reinforce the basics.
Then there’s the importance of paying attention the other local players in the market. “You have to know your business partners, and you have to know who’s on the other side of the table,” Scott says.
Her list of commonsense tips emphasizes the importance of a company’s in-house compliance function. “If employees are trained in the law and understand the reasons behind the compliance policy, companies will likely experience a measurable decrease in their corruption risk,” she wrote.
“Most corporations [doing business] in China are fairly sophisticated,” she says, “But what we’ve seen counseling our clients is that it’s important to make sure all of the basics are covered, even when they’re implementing compliance abroad.”