Compliance is China's latest Hot Topic.
Until recently, many Western managers accepted that some
flexibility on legal issues was needed to thrive in the complex
Chinese legal environment. Practices to strengthen relationships
such as luxurious dinners and karaoke evenings, sponsored travel,
red-pocket money and the like, have often been regarded as part of
the local culture: the best – and in some cases the only
– way to get things done. Just as paying out part of salaries
and bonuses against fapiao (legal invoices), thereby
reducing the burden of individual income tax (IIT), was seen as a
good way to stay financially competitive.
But reality has set in. On the one hand, China is sending a
clear message that incompliance will not be tolerated, for example
with the GSK scandal (CNY 3 billion in bribes), with Chinese
officials at every level (tigers and flies) under arrest, with an
active Public Security Bureau seeking to expel foreigners who do
not have the right
