Coping With Corruption In Trading With Vietnamcase 2 5corruption Is ✓ Solved

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