If You're Doing Business In China, Here's Where You'll Find Most Corruption

China President Xi Jinping Wife Gift France MayorREUTERS/Guillaume Horcajuelo/PoolChina’s President Xi Jinping (C) and his wife Peng Liyuan receive a gift from the Mayor of Lyon Gerard Collomb (L) as they visit an exhibition at the French-Chinese institute in Lyon March 26, 2014. President Xi Jinping is in France for a three-day visit. REUTERS/Guillaume Horcajuelo/Pool

Despite China President Xi Jinping’s anti-corruption campaign, there’s still a considerable among of corruption in the country’s business sector. Bribes still grease the wheels.

According to a report put together by Charney Research, 35 per cent of Chinese firms surveyed said they have had to pay bribes in order to operate. Data is based off a survey of 2,300 firms across China and 27 interviews, spanning a range of industries.

The report said businesses end up paying mainly to keep up with competition. Bribes will also get them more access to raw materials and supplies needed to do business.

One Beijing director told Charney Research, “It’s common in the business field in China (to offer bribes). Peer competition for customers is fierce.” Another respondent said bribery is “an unspoken rule of the industry.”

Drawn from survey data, here’s where Charney Research determined corruption runs the most rampant.

Beijing is the most corrupt region, with 43 per cent of firm reporting having to pay bribes:

Hong Kong-owned firms were also more likely to pay bribes at 44 per cent, compared to foreign firms at 37 per cent, and mainland China firms at 32 per cent.

Industry-wise, real estate and manufacturing are most prone to corruption:

Local officials benefit most from bribes, the report said. Out of the businesses that have to pay bribes, 79 per cent of them said the money and gifts went to local government officials. Then came tax collectors at 56 per cent, national government officials at 34 per cent, customs officials at 22 per cent and road police at 11 per cent.

Not surprisingly, the majority of firms paying these bribes want this system gone. Nine out of ten firms said corruption is a plague, and 61 per cent said that more action need to be taken to fix the problem. In contrast, 29 per cent acknowledged the problem, but said nothing can be done about it.

See the full report at Charney Research >>

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