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Changing environment for foreign companies

CCTV.com

03-11-2016 06:48 BJT

Full coverage: 2016 NPC & CPPCC Sessions

China's anti-corruption campaign to crack down on “both tigers and flies”— high-ranking officials and lower-level bureaucrats—has been foreceful. The effort is one of China's broadest anti-corruption campaigns in history.

CCTV's Guan Xin takes look at foreign companies' views on the campaign and how the investment environment has changed.

Peter Goldsmith is the China chairman of Haskoll, a UK-based architecture and interior design company. Goldsmith has been in China for 10 years and says the country's intensified anti-corruption efforts are a positive for his company.

"We see the anti-corruption campaign as quite important because we think governments will be increasingly doing more work with the private sector in partnership," he said.

"And therefore we will be doing work directly for governments. It is in our interests that business is done fairly, on the basis of merits. That's very important for our existence in China. "

Like Haskoll, many foreign companies have noticed the changes. Emmanuel Vignal from Ernst and Young advises multinational companies on the Foreign Corrupt Practices Act as well as anti-bribery requirements. He says China's anti-corruption move is a game-changer.

"The key concern is about making sure that the book and records accurately and truthfully reflect the transaction. There cannot be any dispute about the fact that maybe a transaction that has occurred, has been disguised as something else...an improper rebate or  improper payment has been disguised as legitimate discounts," he said.

"So all of these changes that are coming together with the anti-corruption campaign are redefining the environment of compliance of multinationals operating in China."

But some experts warn that government officials could become more cautious in the short term and that might slow the decision-making process.

"They are also concerned that there is some kind of freezing effect, so that certain government agencies or government officials may want to be more cautious than before because they want to gradually understand where the boundaries are. So it kind of slows down the efficiency level of decision making regarding multinationals," said Teng Binsheng, associate dean, Cheung Kong Graduate School of Business.

Peter Goldsmith, however, disagrees.

"Slight criticism has been made that there may be a slowdown in the past couple of years of government vehicles, but we haven't found that personally. We found out that recent projects in third-tier cities with local governments and public companies has grown," he said.

The numbers also indicate more confidence in the China market....non-financial FDI jumped 6.4 percent in 2015 compared to a 1.4% rise in 2014.

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