China, still a magnet for foreign firms - Arthur Kroeber

Arthur Kroeber

Doubts on whether China is still the place to be for foreign companies are on the rise in media reports, especially now GlaxoSmithKline is on the chop board. Economic analyst Arthur Kroeber believes those headlines are deceiving and he explains in ChinaFile that foreign firm are profitable and want to expand. 

ChinaFile:

But the headlines are deceiving. Data and company surveys both show that China continues to be a magnet for foreign firms. Greenfield foreign direct investment, according to the Ministry of Commerce, has held steady at US$105-115 billion a year since 2010, well above the pre-crisis level. Inflows in June exceeded $14 billion, the highest monthly total since 1997. Broader data from the central bank, which include reinvested earnings, show that foreign companies committed a quarter of a trillion dollars to China in 2012. 

Member surveys by foreign chambers of commerce consistently reveal that despite their discontent, foreign companies in China are still quite profitable and generally want to increase their investments. A walk down any Chinese high street will quickly confirm these numbers: foreign brands occupy a far larger and more visible slice of the market in China than in most other Asian countries, including Japan, Korea and India. And big cities are filled with tens of thousands of young foreign entrepreneurs who find it easier to start a new business in China than in their home countries.

More in ChinaFile.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

China Weekly Hangout

Foreign firms might be complaining about working in China, Chinese firms have their own complaints about going abroad. +David Wolf, author of Making the Connection, a book about China's telecom giant Huawei, and +Andrew Hupert, specialist in international conflict resolution discussed on the +China Weekly Hangout on October 18, 2012, the future of Huwei, moderated by +Fons Tuinstra, president of the China Speakers Bureau.

The +China Weekly Hangout is taking a summer break and will be back into action in the second half of August.

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Bribes are part of the health care business model - Shaun Rein

Shaun Rein

Giving bribes to doctors and hospitals is illegal, and goes against the beautiful mission statements many pharmaceutical companies have written. But if you want to expand your drug business in China, there is not other way than paying bribes, tells business analyst Shaun Rein in NPR. 

NPR:

"It’s a systemic problem. It’s certainly not a GlaxoSmithKline problem," says Shaun Rein, author of The End of Cheap China. 

Salaries for doctors in China average less than a thousand dollars a month. As a result, bribes are an integral part of China’s healthcare system. 

"Foreign pharmaceutical brands are caught in a conundrum," says Rein. "In order for them to sell into China, they have to give bribes. Because that’s what the Ministry of Health and that’s what hospital administrators and doctors are forcing them to do. If you don’t give a bribe, you can’t expand here." 

Rein suspects the government is singling out GlaxoSmithKline because it wants to put an end to the corruption in China’s healthcare system and it’s easier to target foreign companies to scare the entire industry.

More in NPR.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

China Weekly Hangout

Not surprisingly, coming Thursday 25 July the +China Weekly Hangout will offer the opportunity to exchange thoughts on corruption and health care in China. You can read our announcement here, but when you also follow our Google+ page, you won't miss any announcements.

The +China Weekly Hangout discussed the bird flu in China on April 18 with flu expert Harm Kiezebrink  from Beijing, HKU-lecturer +Paul Fox from Hong Kong and CEIBS adjunct professor +Richard Brubaker from Shanghai. We try to figure out what is happening with N7H9, and what possible scenario's can develop. And we discuss what the Chinese government has learn from SARS, now ten years ago. Moderation by +Fons Tuinstra of the China Speakers Bureau.

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Health care and corruption - China Weekly Hangout

GlaxoSmithKline (Photo credit: Ian Wilson)

The arrest of senior GlaxoSmithKline executives, and the flood of news orchestrated by the central government, left quite some people with China experience bewildered behind. Kickoffs have been the core business model of China's health care for decades. And while it is a good idea to change that fallacy, why not start with the basic cause: the low salary of doctors and poor funding of hospitals. What is developing here?
In short: reasons enough for the +China Weekly Hangout to discuss recent affairs in the health care industry, and whether there is a way to reform this crucial industry.
On Thursday 25 July we hope to get a few people together to discuss the issue. Do you want to share your experiences with health care in China? You can leave your comments here or register right away at our event page.

The hangout will start as normal at 10pm Beijing Time, 4pm CEST (Europe) and 10am EST (Canada/US). You can watch the proceedings here, or at our event page.

Update: We faced on Thursday 25 July an unprecedented set of technical setbacks and could not get the hangout started. If possible, we will plan a new chance later this summer. Announcement will follow.

What will be on the agenda of the +China Weekly Hangout in the coming months? +Steve Barru and +Fons Tuinstra discussed food security, visa problems, politics, shadow banking, urbanization, inbound investment and outbound investments on July 18 in an open office session.

You can watch all previous hangouts here.

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Bribery is endemic in pharma - Ben Cavender

Ben Cavender

GlaxoSmithKline found itself in the hot seat, after China's authorities started an investigation into its bribery practices and one of its executives was broadcasted on central tv, confessing his crimes. But in some industries, including pharma, bribery is endemic, tells marketing analyst Ben Cavender at CNN.

CNN:

It's not yet clear how much damage the scandal will do to GSK's reputation or bottom line. But the episode underscores the challenges of doing business in China, an enormous, rapidly developing market in which bribes and corruption are often deeply ingrained. 

"There are certain industries where corruption is still very common," said +Benjamin Cavender, an associate principal at China Market Research Group. The pharmaceutical industry, he said, is one in which bribery is endemic. 

"GSK is not special in terms of what they do," Cavender said. "Most companies in this sector are probably using kickbacks or bribes." 

It's not yet clear whether the GlaxoSmithKline allegations are tied to a probe of price setting practices at 60 pharmaceutical companies announced last month by authorities. But there are signs that investigators might soon name and shame more drug companies as part of a larger anti-corruption crackdown.... 

Medical workers are thought to be particularly susceptible to bribery in China because their salaries often lag other fields -- even though extensive education is required to enter the profession. 

"Doctors are severely underpaid relative to what they do," Cavender said. "They tend to have very low salaries and their compensation levels don't allow them to live a middle class lifestyle."... 

Cavender said that the GSK investigation is likely part of a much larger trend -- one with consequences for companies that draw the attention of authorities. 

"For foreign companies doing business in China, it's going to be really important to keep to the exact letter of the law," he said.

More at CNN.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

China Weekly Hangout

Another industry marred by corruption is the food industry, causing strings of scandals. Food security was at the agenda of the +China Weekly Hangout on March 21 with sustainability expert +Richard Brubaker, +Andrew Hupert and +Chris Brown and how the ongoing problems will lead to massive food inflation. In the end we (both in China and outside) will have to pay the price for safe food. Moderation by +Fons Tuinstra of the China Speakers Bureau.

The +China Weekly Hangout will hold on Thursday 18 July an open office where you can drop in to discuss upcoming subjects, panelists and current affairs in China. Here is our announcement, or you can register for participation right away on our event page. 

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