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China will declare war on business-to-business bribes next year while maintaining its focus on corrupt government officials who take kickbacks.

 

The country is revising laws and regulations and calling for concerted efforts from the government, business circles as well as citizens to battle against corruption in businesses which could become a major threat to China's investment environment.

 

It was quite common for those bidding for business in China to offer potential customers or partners kickbacks ranging from cash and luxury goods to paid holiday travel. Many companies believed that the practice was a "tacit rule" of the Chinese market until a Los Angeles company was fined in the United States for paying bribes in China.

 

DPC (Tianjin) Co. Ltd or DePu, the Chinese subsidiary wholly owned by the Los Angeles-based Diagnostic Products Corp., had to pay US$4.8 million in May to settle issues related to bribery allegations.

 

The company was found to have paid about US$1.6 million to doctors and others who worked in public hospitals and then recorded the illegal payments as legitimate sales expenses.

 

The DPC scandal is just a "tip of the iceberg," say sources attending a recent symposium on the eradication of bribery in Tianjin. "Unless the practice is uprooted, business bribes and subsequent market corruption will hinder China's economic development," said Prof. Cheng Baoku, a professor of law with the Tianjin-based Nankai University.

 

The problem has drawn the attention of the Communist Party of China (CPC) Central Committee and the central government. A special mission was established recently to curb bribes in the business sector, headed by a senior official from the CPC Central Commission for Discipline Inspection, the CPC's anti-corruption arm.

 

The State Administration for Industry and Commerce is also soliciting complaints from the general public, who are inspired to dial the consumers' hotline at 12315 to report business bribery cases.

 

The Ministry of Commerce has also chipped in, with a corporate creditability management mechanism to fight bribes in the sales and marketing process.

 

"Besides government intervention, the Chinese public should also play a larger role in curbing bribes," says Dr. Long Taijiang with Hunan University's clean government research center. "Citizen involvement will help build up a sound value system that disapproves of kickbacks and other forms of bribes in the business community."

 

Meanwhile, China is working to revise its law against unfair competition, which was promulgated in 1993 but requires amendments to gear to the present-day market situation and varying forms of commercial bribes.

 

"The revised law will define the various forms of commercial bribes and mete out more sever administrative penalties," said a legal expert with the State Administration of Industry and Commerce who is involved in the law revision.

 

He said it is also imperative to improve the accounting system and enhance coordination between relevant departments in the settlement of bribery cases.

 

Between 2000 and June 2005, China's market watchdog investigated into 13,606 business-to-business bribery cases that involved 5.28 billion yuan (about US$650 million). 

 

(Xinhua News Agency December 24, 2005)