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The fight against corruption in China
July 2, 2015

The fight against corruption in China

The unexpected effects of the fight against corruption or “how to make profit on a bribe in China” … A true story!

The following is the true story of something that happened to a European small business based in Shanghai. James was its managing director in China and was seeking to obtain permission to open a store in a shopping street.

Endless negotiations

Around two years ago, he was in negotiation with one of the city’s administrative departments to obtain permission to open a sales outlet for the general public in a shopping street but things weren’t moving very quickly. One day, at the end of yet another round of discussions which had proved just as fruitless as the last, a member of the Shanghai administration, Zhang Ming, approached him quietly in the corridor and asked to meet with him in private. James accepted an invitation and an appointment was arranged a few days later. Intrigued, James couldn’t stop thinking about this invitation.

Things move quickly

At 6:30 PM, James met Zhang Ming at the Mei Long Zhen a popular restaurant at number 1081 West Nanjing Lu. A photo of Jacques Chirac hung at the entrance (he liked it here). With a stylish atmosphere, traditional cuisine, tables sufficiently far away from one another, everything was perfect for a private discussion. The conversation covered all kinds of small talk, including the family, friends, life in the area, the pollution in Beijing and then finally the true subject of the conversation emerged towards the end of the meal. Zhang Ming mentioned his contacts and his network, and the influence he could have on the decisions to be taken …James listened quietly began to understand where the conversation was going. A few moments later, everything was clear, when Zhang Ming asked for €1,000 in cash to unblock the application. They quickly moved on to other things and the evening ended on a friendly note but with a future date and meeting point arranged for the handover of an envelope. A few weeks later, the authorisations were granted as if by magic!

An unexpected surprise!

As you know, since coming to power in 2013, Chairman Xi Jinping is trying to eradicate corruption in China. His government is seeking out the ‘tigers and the flies’, or in other words the major and minor players when it comes to corruption. Life has become somewhat dangerous!

Approximately 18 months after the act of corruption mentioned above, James received a phone call from Zhang Ming during which the latter asked to see him again. James agreed but was wondering why. When they met at the restaurant, Zhang Ming looked worried and the conversation was a little strange, focusing on the business climate, the political situation, and the atmosphere of suspicion which was gradually developing. Finally, Zhang Ming asked if James would agree to take back the money that he had paid. James stared at him wide-eyed but politely agreed and a new appointment was arranged. A few days later, in a fashionable cafe, the two men met up by chance and James received an envelope which he stuffed in his pocket. Back at the office, James was surprised to find that it wasn’t €1,000 that Zhang Ming had paid him back but €3,000, a margin of €2,000!

The likely explanation

The probable explanation: Zhang Ming had probably received a large number of bribes. He couldn’t put them in the bank in China and it was too risky to take them to Hong-Kong. All of these illicit earnings were therefore kept in cash at his house, and could be discovered at any time by Beijing’s anticorruption squad. Having probably destroyed the little notebooks in which he kept records of the “gifts” he received, Zhang Ming paid them back as best he could remember. This is just one surprising effect of the ongoing campaign against corruption in China!


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About author

Philippe Vigoureux

Philippe Vigoureux

Philippe Vigoureux has worked in France, Britain and China for the British Petroleum Group. In 1999 he became a consultant and interim manager, working with several consulting companies, such as Gemini Consulting, Roland Berger, and IMC (UK) AT Kearney. From 2001 to 2005, his time was divided between China and France to help with the restructuring of Chinese companies as part of a program funded by the European Union. Having acquired a wide experience and deep knowledge of China, he regularly assists companies with projects in China and lectures.

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