Coping with Corruption in Trading with Vietnam CASE 2-5 Corruption is a fact of life in China. In fact, Transparency Interna- tional, a German organization that applies its Corruption Perception Index (CPI) globally,1 rates China with a CPI of 3.6 and is number 75 of the 183 countries rated. New Zealand is rated the least cor- rupt at number 1 with a CPI of 9.5, the United States at 1924 with a CPI of 7.51, and North Korea and Somalia the most corrupt at number 182 with a CPI of 1.0. The country’s press frequently has detailed cases of corruption and of campaigns to crack down on bribery and other forms of corruption. The articles primarily have focused on domestic economic crimes among Chinese citizens and on local officials who have been fired, sent to prison, or assessed other penalties. There is strong evidence that the Chinese government is taking notice and issuing regulations to fight corruption. Newly issued Communist Party of China (CPC) regulations on internal super- vision and disciplinary penalties have raised hopes that the new regulations will enhance efforts against corruption. The regula- tions established “10 Taboos” for acts of party members that violate political, personnel, and financial regulations and who are involved in bribery, malfeasance, and infringement of oth- ers’ rights. The taboos included lobbying officials of higher rank, handing out pamphlets or souvenirs without authorization, holding social activities to form cliques, and offering or taking bribes. Also on the list were making phone calls, giving gifts, holding banquets or conducting visits to win support, covering up illicit activities, spreading hearsay against others, using intimidation or deception, and arranging jobs for others. Some believe that the execution of three bankers, for “a run-of-the-mill fraud,” just before the Communist Party’s annual meeting, was an indication of how serious the government was about cracking down on corruption. Much of China’s early efforts to stem corruption were focused on activities among domestic Chinese companies and not on China’s foreign business community. Traders, trade consultants, and analysts have said that foreign firms are vulnerable to a vari- ety of corrupt practices. Although some of these firms said they had no experience with corruption in China, the majority said they increasingly were asked to make payments to improve business, engage in black-market trade of import and export licenses, and bribe officials to push goods through customs or the Commodity Inspection Bureau, or engage in collusion to beat the system. The Hong Kong Independent Commission Against Corruption reports that outright bribes, as well as gifts or payment to establish guanxi, or “connections,” average 3 to 5 percent of operating costs in the PRC, or $3 billion to $5 billion of the $100 billion of foreign invest- ments that have been made there. The most common corrupt prac- tices confront.

1. Coping with Corruption in Trading
with Vietnam
CASE 2-5
Corruption is a fact of life in China. In fact, Transparency
Interna-
tional, a German organization that applies its Corruption
Perception
Index (CPI) globally,1 rates China with a CPI of 3.6 and is
number
75 of the 183 countries rated. New Zealand is rated the least
cor-
rupt at number 1 with a CPI of 9.5, the United States at 1924
with
a CPI of 7.51, and North Korea and Somalia the most corrupt at
number 182 with a CPI of 1.0. The country’s press frequently
has
detailed cases of corruption and of campaigns to crack down on
bribery and other forms of corruption. The articles primarily
have
focused on domestic economic crimes among Chinese citizens
and
on local officials who have been fired, sent to prison, or
assessed
other penalties.
There is strong evidence that the Chinese government is taking
notice and issuing regulations to fight corruption. Newly issued
Communist Party of China (CPC) regulations on internal super-
vision and disciplinary penalties have raised hopes that the new
regulations will enhance efforts against corruption. The regula-
tions established “10 Taboos” for acts of party members that

2. violate political, personnel, and financial regulations and who
are involved in bribery, malfeasance, and infringement of oth-
ers’ rights. The taboos included lobbying officials of higher
rank,
handing out pamphlets or souvenirs without authorization,
holding
social activities to form cliques, and offering or taking bribes.
Also
on the list were making phone calls, giving gifts, holding
banquets
or conducting visits to win support, covering up illicit
activities,
spreading hearsay against others, using intimidation or
deception,
and arranging jobs for others. Some believe that the execution
of three bankers, for “a run-of-the-mill fraud,” just before the
Communist Party’s annual meeting, was an indication of how
serious the government was about cracking down on corruption.
Much of China’s early efforts to stem corruption were focused
on activities among domestic Chinese companies and not on
China’s foreign business community. Traders, trade
consultants,
and analysts have said that foreign firms are vulnerable to a
vari-
ety of corrupt practices. Although some of these firms said they
had no experience with corruption in China, the majority said
they
increasingly were asked to make payments to improve business,
engage in black-market trade of import and export licenses, and
bribe officials to push goods through customs or the Commodity
Inspection Bureau, or engage in collusion to beat the system.
The
Hong Kong Independent Commission Against Corruption
reports
that outright bribes, as well as gifts or payment to establish
guanxi,

3. or “connections,” average 3 to 5 percent of operating costs in
the
PRC, or $3 billion to $5 billion of the $100 billion of foreign
invest-
ments that have been made there. The most common corrupt
prac-
tices confronting foreign companies in China are examined
here.
PAYING TO IMPROVE BUSINESS
Foreign traders make several types of payments to facilitate
sales
in China. The most common method is a trip abroad. Chinese
officials, who rarely have a chance to visit overseas, often
prefer
foreign travel to cash or gifts. (This was especially true when
few
PRC officials had been abroad.) As a result, traders report that
dangling foreign trips in front of their PRC clients has become
a regular part of negotiating large trade deals that involve prod-
ucts with a technological component. “Foreign travel is always
the first inducement we offer,” said an executive involved in
machinery trade. In most cases, traders build these costs into
the
product’s sale price. Some trips are “reasonable and bona fide
expenditures directly related to the promotion, demonstration,
or explanation of products and services, or the execution of
a contract with a foreign government agency,” but it may be
another matter when officials on foreign junkets are offered
large per diems and aren’t invited specifically to gain technical
knowledge.
Foreign travel isn’t always an inducement—it also can be
extorted. In one case, a PRC bank branch refused to issue a
letter
of credit for a machinery import deal. The Chinese customer

4. sug-
gested that the foreign trader invite the bank official on an
overseas
inspection tour. Once the invitation was extended, the bank
issued
the letter of credit.
ANGLING FOR CASH
Some MNCs are asked to sponsor overseas education for the
chil-
dren of trading officials. One person told a Chinese source that
an
MNC paid for that individual’s U.S. $1,500-a-month apartment,
as
well as a car, university education, and expenses.
Firms find direct requests for cash payments—undeniably
illegal—the most difficult. One well-placed source said that a
major trader, eager for buyers in the face of an international
market glut, had fallen into regularly paying large kickbacks
into the Honduran, U.S., and Swiss accounts of officials at
a PRC foreign trade corporation. Refusing to make payments
may not only hurt sales, it can also be terrifying. A U.S. firm
was one of several bidders for a large sale; a Chinese official
demanded the MNC pay a 3 percent kickback. When the com-
pany representative refused, the official threatened: “You had
better not say anything about this. You still have to do business
in China, and stay in hotels here.” Not surprisingly, the U.S.
company lost the deal.
Traders of certain commodities may be tempted to resort to
the black market for import and export licenses that are difficult
to obtain legally. A fairly disorganized underground market, for
instance, exists for licenses to export China-made garments to
the
United States.
Some branches of the Commodity Inspection Bureau (CIB)
also have posed problems for traders. Abuses have emerged in

5. the CIB since it started inspecting imports in 1987. A Japanese
company, for instance, informed CIB officials of its intention
to bring heavy industrial items into China—items that had met
Japanese and U.S. standards. The officials responded that they
planned to dismantle the products on arrival for inspection pur-
poses. The problem was resolved only after the firm invited the
officials to visit Japan.1See http://www.transparency.org for
more details about its 2010 index.
cat42162_case2_01-031.indd 18 10/21/15 11:12 AM
Cases 2 The Cultural Environment of Global Marketing
Some traders get around such problems by purchasing inspec-
tion certificates on the black market. According to press
accounts,
these forms, complete with signatures and seals, can be bought
for
roughly U.S. $200.
Some claim that, for the appropriate compensation, customs
officials in a southern province are very willing to reduce the
duti-
able value of imports as much as 50 percent. Because the
savings
can far exceed transport costs, some imports that would
logically
enter China through a northern port are redirected through the
southern province.
The new Communist Party of China (CPC) regulations address
some of these problems, but unfortunately, the new law raises
more
questions than answers. Two kinds of bribes are covered under
the new law: The “Criminal Law of the PRC,” known as
common

6. bribery, applies to the bribery of state officials and employees
of
state-owned enterprises, which are most of China’s large
compa-
nies. Anyone who demands or accepts money or property in
return
for benefits is guilty of bribery. The other is the “Law Against
Unfair Competition of the PRC,” known as commercial bribery.
It
prohibits businesses from giving money or property to
customers
to sell or purchase products.
The law is confusing in that it says nothing about punishment
for gifts and benefits costing less than $600 or even whether
these
transactions can amount to bribes. Thus, tickets to sports
events,
which can cost several hundred dollars, wining and dining
execu-
tives, or even pharmaceutical samples to physicians remain in
a gray area. The only clue is that Communist Party guidelines
prohibit members from accepting gifts exceeding $500 but that
doesn’t necessarily mean that gifts under $500 won’t be consid-
ered a violation of the law. The trouble with China’s bribery
laws
is that they can be interpreted to apply to any gift at all.
AN ILLUSTRATION
Here are some excerpts from a trial concerning a Chinese bank,
a
Chinese consultant, and several U.S. companies in which
charges
of bribery, among other issues, are involved. The list of
charges,
countercharges, and alleged bribery will give you a sample of
the

7. types of behavior that can arise in a transaction where bribery is
rampant.
A Chinese company alleged that it got pushed out of a lucra-
tive business deal because an American software company
secretly funneled money to powerful Chinese government offi-
cials to ensure a profitable banking contract. In court filings,
lawyers for the Chinese company said they had obtained copies
of detailed e-mails and other records that show that the
American
company paid over a million dollars in fees to a consultant for
services in addition to reimbursing the consultant about
$170,000
in expenses covering an array of gifts, hotels, shopping sprees,
and entertainment costs.
The suit also contends that the American company arranged
through the Chinese consultant for two Chinese banking offi-
cials and family members to travel on vacation to Hong Kong,
Paris, Rome, Las Vegas, and the golfing resort of Pebble Beach,
California. These trips were arranged by a consultant who was
reimbursed for an array of gifts given to the Chinese bankers
and
their families. The gifts included expensive Sony cameras,
luxury
outfits from Versace and Burberry, and perhaps even a $330,000
apartment in Shanghai.
The suit says an American company official e-mailed another
company executive saying the chairman of China Construction
Bank was interested in playing golf at “Cobble Beach” (he
thought
he meant Pebble Beach). Soon after, the American company
paid
for the chairman’s hotel, car services, and green fees in Pebble
Beach. After the chairman expressed an interest in seeing
Florida,
the lawsuit says the American company sent its corporate jet to

8. fly
him from San Francisco, where he had been visiting with
another
U.S. company, to its headquarters in Florida.
The lawsuit also charges that the American company reim-
bursed the consultant for tickets the chairman’s wife and son
used
to travel in China and the United States. The lawsuit claims it
also
paid for his son’s tennis club fees in Shanghai and golfing fees
in Shenzhen and for the daughter of the bank’s chief
information
officer to travel to Europe.
The American company contended that all payments made to
the consultant and all the business trips by the Chinese officials
the company paid for were legitimate costs of doing business in
China. It is the price the company had to pay to help secure a
huge software contract with China Construction Bank worth
about
$176 million.
It is important to note that this is an illustration of a civil law-
suit between two companies and does not involve charges by the
U.S. government and possible violations of the FCPA. However,
the report indicated that the Justice Department was looking
into
the charges.
TWO COMMENTS ON DEALING WITH
CORRUPTION
Comment of a Consultant As the head of one U.S.
consulting firm asserts, “Corruption is a huge issue, it’s
systemic.
Whether it’s self-dealing, phantom suppliers, kickbacks,
intellec-
tual property theft or inappropriate dealings with governmental
officials, crime and corruption are risks companies face when

9. operating in China. There are many instances where,
unbeknownst
to the U.S. company, various payments are being made under
the
table. The company’s credo, the company’s standard operating
procedures, the company’s code of conduct, corporate
governance,
best practices—all of that needs to be ingrained and it needs to
be
accepted. There has to be constant training and constant
reminding”
to the local Chinese staff. Chinese culture is “very different”
from
Western culture. As such, “a U.S. company cannot simply
translate
its compliance policies and procedures into Chinese and expect
them to have the same effect as in the U.S. The entire approach
must be tailored to the Chinese environment.”
Comment of Former U.S. Foreign Service
Agent A retired agent of the U.S. Foreign Service raises
questions about how strictly the Foreign Corrupt Practices Act
is enforced. The economics officer of the U.S. Foreign Service
says he intentionally subverted the intent of the Foreign Corrupt
Practices Act so U.S. investors and exporters would not lose out
unfairly to companies and agencies from other foreign
countries.
“I figured out how business was actually done in corrupt coun-
tries, who was on the take, whether the going rate for host
country
cooperation in a particular type of transaction was 10 percent or
25 percent and who was good or bad as a go between.”
“I would tell Americans trying to do business in the host
country: ‘Don’t tell me about any corrupt practices you are
engaged in, because I am obliged to write that up and report
you

10. to Washington, but do tell me in detail about corrupt activities
by competing foreign companies. In return, if your information
cat42162_case2_01-031.indd 19 10/21/15 11:12 AM
Part 6 Supplementary Material
is interesting, I’ll give you my best guess on how corruption
works here.’ By doing this I hope that I have helped level the
playing field.”
QUESTIONS
1. List all the different types of bribes, payments, or favors
represented in this case under (a) FCPA, (b) Criminal Law of
PRC, and (c) Law Against Unfair Competition of the PRC.
Why is each either legal or illegal?
2. For those practices that you listed as illegal, classify each
as lubrication, extortion, or subornation, and explain your
reasoning.
3. Which of the payments, favors, or bribes are illegal under the
Foreign Corrupt Practices Act (FCPA)?
4. Assuming that the FCPA did not exist, what is the ethi-
cal response to each of the payments, favors, or bribes you
have identified? Read the section titled Ethical and Socially
Responsible Decisions in Chapter 5 as a guide to assist you
in your decision.
5. In your view, which of the expenses detailed in the lawsuit
could be in violation of the FCPA, and which could be legiti-

11. mate business expenses as the American Company contends?
Discuss.
6. Discuss the legal/ethical issues raised by the comments by
the retired Foreign Service agent and the consultant.
7. List alternatives to paying bribes in international markets and
discuss the plusses and minuses of each.
Sources: Walter H. Drew, “Corrupt Thinking,” Foreign Policy,
May/June 2005;
David Barboza, “Charges of Bribery in a Chinese Bank Deal,”
The New York Times,
November 29, 2006; “India, China Ranked 72 out of 180 in
Corruption Rankings,”
The Hindustan Times, October 8, 2007; “Take Great Care in
Choosing Partners:
Corruption Rampant, but Lately Its Drawing Government
Attention,” Business
Insurance, March 26, 2007; “China’s Communist Party Issues
List of ‘Taboos’ Ahead
of Politician Reshuffle,” International Herald Tribune, January
4, 2008; “China Lists
New Anti-Graft Rules,” BBC News, January 4, 2008;
Transparency International, 2012.
cat42162_case2_01-031.indd 20 10/21/15 11:12 AM
Running Head: GOOGLE ADWORD INVESTMENT
1
GOOGLE ADWORD INVESTMENT
2

12. Strategic Marketing & Promotion
Your Name:
Student ID:
University
Due Date
Strategic Marketing & Promotion
Developing a business needs one to be well aware of all the
factors and elements that can make or break the business.
Understanding these elements makes it possible for an
organization to develop a marketing plan that fits into the
confinements of the company. However, considering that this
can be a very task filled endeavor, many companies opt to
outsource skilled entities that are established to tackle such
objectives and develop some of the most ideal campaigns, ads
and marketing strategies (Cheong, Kim & Combs, 2016). This
study will be looking into pitching an advertisement plan and

13. project to a company that needs to scale its marketing heights so
as to turn a new leaf in its business quest. For this particular
project, the plan will be developed by a company that will be
outsourced by the HED Cycling, as for the advertisement plan,
the outsourced organization (Sherlock Marketing and
Consulting Firm) will apply the Google AdWords program.
Sherlock Marketing and Consulting Firm
To assist HED Cycling company attain its goals, my company
(Sherlock Marketing and Consulting Firm) will turn to a more
technically advanced strategy that will not be too expensive for
the company, but will allow the organization to increase the
traffic to its website and social networks. Sherlock Marketing
and Consulting Firm is a company that takes keen in interest in
the advertisement industry as the company aims at building up
start up and mid-level companies. The driving factor about
Sherlock Marketing and Consulting Firm is the special
relationships that brew with clients over time as excellence is
attained. HED Cycling has been a personal favorite to the
advertising agency as it promotes a healthier way of living and
also happens to be the first ever company to have hired
Sherlock Marketing and Consulting Firm as it was in its starting
era.
Client: HED Cycling
HED Cycling is a technical manufacturing company that has
specialized in the innovative making of bicycle wheels, brake
systems and other accessories that make cycling better, faster,
safer and easier. The company is one of the most famous sports
apparel when it comes to cycling as it has had a great
opportunity to develop wheels that have been used in the
famous Tour de France event.
The company’s website is a very interesting one that features a
slide show of the achievements the company has had over time,
some of the designs they make and a history on the founder. The
website also offers a section of making an order as the images
are displayed on the website, not only this, but the website has
all the necessary contact details that would be needed to make

14. the customer learn more about the company and what it offers.
The company’s unique selling point is the fact that it has been
able to reinvent the wheel which has been seen as a cliché. The
fact that the company is also recognized and used by world
famous athletes and celebrities is also another selling point
(Hed & Edin, 2018).
Investing in an AdWords Campaign
Despite the company being well known by great athletes and
personalities, many people fail to acknowledge the fact that the
items developed by the company are not just for high-end
athletes as they also develop custom orders and have items that
be bought for children’s bicycles as well as those who would
want a better experience as they cycle. Therefore, having an
AdWords Campaign will make it possible for the company to
educate the public as well as improve the traffic to its website.
This will equally translate to more sales and profits over time.
The company will experience more satisfaction as well as
reduced costs if it applies the Pay-Per-Click (PPC) as it will
only pay for the number of views/ad clicks it gets over time
(Wood, 2018). The ad can also be linked with some of the
famous cycling events that it has sponsored and has been part of
such as the Tour de France. The ads can also be linked to some
of the famous cycling personalities that subscribe to the
company. By having such leverages, a word search on a cycling
event will bring the HED Cycling website at the top of the
google results.
HED Cycling aims at reaching out to more people over the
online platforms most of which are not famous cyclists as well
as from different corners of the world. The company aims at
reaching a level of turning into a global company through an
online base which will allow the company to have different
branches and distribution points across the world. Therefore,
the company aims to build a large customer base as well as
make itself well known across the world. This counts as an aim
of making the HED brand dominant in the cycling industry as it
aims to dominant in the business over time (Hed & Edin, 2018).

15. Objective Success for HED Cycling
As mentioned before, the company aims at increasing traffic to
its website as well as boost its sales as it prevails on the journey
of investing in a Google AdWords Campaign (Antoun, Zhang,
Conrad & Schober, 2016). Below is a representation of the
results that would point out a success in the investment:
Target Audience
HED Cycling aims at targeting any individual who has some
form of interest in cycling and would want to improve their
experience. The company is also targeting professional athletes
and those who are striving to become cyclists. The main regions
the company is also looking to invest in are; the US,
Amsterdam, China, South Africa, Australia, Germany and
Singapore. These regions are some for areas that cycling is
highly seen to be beneficial and is still a great means of
transport, recreation, and exercise.
As much as the company aims at building it business across the
globe and through all the regions mentioned above, the company
also needs to look into investing more in nations that highly
value the art of cycling as this will be the main and free
marketing front HED Cycling needs. Therefore, the best
geographic region to invest in would be Netherlands (Hofstede-
insightscom, 2019), this is because this is the number one
location in the world where the business can thrive best and
receive free publication and advertisement as the region values
cycling to date. Below is a table that shows the average and
compiled statistics of the regions the company is looking to
invest in compared to the data obtained from Netherlands
(Nytimescom, 2019):
Points of Comparison
Compiled data from other nations
Netherlands
People
310,936,000
17,080,000

16. Bicycles Present
100,000,000
16,927,000
Cyclists Present
32.2%
99.1%
Distance covered per person
0.1 Km
2.5 Km per day
Trips made using bicycles
0.9%
40%
References
Antoun, C., Zhang, C., Conrad, F. G., & Schober, M. F. (2016).
Comparisons of online recruitment strategies for convenience
samples: Craigslist, Google AdWords, Facebook, and Amazon
Mechanical Turk. Field Methods, 28(3), 231-246.
Cheong, Y., Kim, K., & Combs, J. (2016). Advertising agency
operating efficiency. Journal of Marketing
Communications, 22(1), 83-99.
Hofstede-insightscom. (2019). Hofstede Insights. Retrieved 24
January, 2019, from https://www.hofstede-
insights.com/country-comparison/
Hed, S. A., & Edin, C. A. (2018). U.S. Patent Application No.
10/137,728.
Nytimescom. (2019). Nytimescom. Retrieved 21 January,

17. 2019, from
https://www.nytimes.com/2017/09/06/world/europe/bicycling-
utrecht-dutch-love-bikes-worlds-largest-bike-parking-
garages.html
Website visits per Day
Website visits per Day 1st Quarter 2nd Quarter 3rd
Quarter 4th Quarter 5000 10800 21000 29674
Sales Revenue Per Month
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
50000 150000 260000 350000