2. Pearson College London XXXX 2
School of Business
International Business Regions: China
China’s government
Government & Business
• What part does government play in Business?
• Let’s take a look at two video clips:
1. PIGS & The Economist
http://www.economist.com/multimedia?bclid=0&bc
tid=3475186766001
2. Dealing with the Government – from Professor
Story China Uncovered with UKTI
https://www.youtube.com/watch?v=VbFdLY04_CM
3
3. Pearson College London XXXX 3
School of Business
International Business Regions: China
China’s government
Group Discussion
How much of a role does government play in
business?
What do you need to take into consideration when
establishing, maintaining and operating a business in
China?
Contracts & Corruption
4. Pearson College London XXXX 4
School of Business
International Business Regions: China
China’s government
Corruption
Editor's Notes
[Allow 2 minutes]
How do you control a country that is continental in size and is home to a quarter of the world’s population? Who is in charge? How are the leaders elected? does the Communist Party look like? Can economic and social revolution take place without political change? What is the mandate of the Chinese government?
Quick and simple question for you: can anyone define what government is? It is the body that runs the state – BUT what we will look at today is the complexity of what that means in the Chinese context.
We will look at all these things today as well as the role of the police, the military, the justice system. We will also look at the role and control of the media – the voice of the state (Peoples Daily and Global Times take their queues from the party. We will also take a brief look at the provision of social welfare and how this has changed over recent years. Guangdong pushes the limits – they go to the line. Always looking over their shoulder.
[Allow 2 minutes]
Can anyone tell me what communism means?
[It is a Marxism-Leninism based theory of government which believes that everyone should be equal removing the elite and the class system. Everyone must play their part to assist the state and participate equally. Consequently, the government has a lot of authority and strict control].
As it happens, China rarely references itself as being a communist country anymore but rather a socialist country with Chinese characteristics. In China’s case Marxist-Leninist Thought has been watered down with Mao Zedong Thought and Deng Xiaoping Theory to make a very Chinese ideological mesh. Overall, though, the principle of communism and still held in China is that the state should own and benefit from the success of key industries and businesses. Capitalist tendencies work if everyone can benefit from them.
Other communist states have fallen when there has been social or economic reform.
Source: Transparency.org and Fifa.com
This is quite an interesting slide looking at corruption and transparency and comes from FIFA and Transparency International, the global coalition against corruption. It concludes that in China:
Corruption is widespread taking the form of lavish gifts & expensive meals. It is interesting to note that since 2013 there has been a major top-down led dictat and propaganda campaign to clean-up widespread corruption.
Bribes are explicitly given in exchange for permits, approvals or jobs
Opportunities to acquire shares or real estate are not subjected to law enforcement
2011 Report issued by China’s Central Bank estimated that from mid 1990’s to 2008, corrupt officials took US$120 billion overseas – others suggest this is likely to be much higher. Until the full convertibility of the Renminbi, RMB cannot be taken out of China, but instead is removed via trading companies in Hong Kong or businesses with licences to export.
Present Government trying to restore Party reputation. When senior Party Members are accused of corruption often political motivation from on high, to remove that official, to perhaps strengthen a certain power base.
Despite recent clampdown, there is no transparency vis a vis assets of senior party members. Just prior to former Premier Wen Jiabao’s end of term of office, The Telegraph newspaper broke the news story in January 2012 that he and his relatives had amassed a $2.7 billion fortune. [Source: http://www.telegraph.co.uk/news/worldnews/asia/china/10582444/Chinas-former-PM-denies-role-in-familys-hidden-riches.html]
On the eve of President Xi Jinping assuming power, Bloomberg covered a story suggesting that relatives of Xi Jinping had also built a family fortune of at least $376 million.
The Disciplinary Commission investigates all corruptions cases. Often powerful party members are able to protect themselves, their families and proteges from any enquiries or public criticism. And because it is the party which investigates the party - it is not prepared to tolerate outsiders monitoring its members' behaviour - the commissions are always prone to interference from higher up. For example, the now disgraced Chongqing Party Secretary, Bo Xilai, was investigated by the Party first before being handed over to the State Judiciary.
Wen Jiabao, the former Chinese premier whose relatives were accused of amassing a $2.7 billion fortune in 2012, tells Hong Kong columnist: "I want to leave this world clean.“http://www.telegraph.co.uk/news/worldnews/asia/china/10582444/Chinas-former-PM-denies-role-in-familys-hidden-riches.html
Anti-corruption drive started by Chinese President Xi Jinping has made clamping down on corruption one of his main aims in his first year in office.
The reason is straightforward: There are tens of thousands of protests across China every year, and many of the complaints are over corruption. With growth slowing, such tensions lying just beneath the surface are more likely to flare up.
For foreign companies, one of the toughest parts of navigating China is the line between money spent on corruption versus developing relationships
As a non-democratic country that doesn't have the usual safety valves - like the ability to throw the corrupt ones out of office - the tension that can build up may threaten social stability - the very thing that the Chinese government dreads. The word "luan", which means chaos, is one of those the Chinese are keen to avoid.
