The “everyone does it” claim by foreign companies operating in China is a poor excuse for flaunting the country’s laws and regulations, according to an opinion article by Powell Tate Australia’s Alistair Nicholas in today’s Australian Financial Review. Alistair, who was based in China from 2000 to 2013, draws on his extensive experience working with foreign companies in China in the article. As he states, he often found himself having to assist foreign companies who found themselves on the wrong side of China’s laws or regulations, especially those governing the import of food and medicines into the country.
The article, which follows the arrest of 18 gambling industry executives in China, looks at the risks of over-enthusiastic marketing by Australian (and other foreign) companies that often contravene China’s laws and regulations. In the article Alistair suggests that companies involved in the gambling sector should have “read the tea leaves” and curbed their marketing efforts in China.
Alistair includes the following among the matters companies in the gambling industry should have been sensitive to:
- That casinos and gambling, along with marketing of casinos and gambling, are illegal under Chinese law – indeed, some 40 executives of South Korean casinos were arrested in China last year for breaching these laws, and Las Vegas casino operators have pared back their marketing efforts in China in response to the laws;
- The Chinese Government’s current crackdown on corruption is targeting many of the high roller clients of casinos given gambling’s links to money laundering – anyone marketing to this group would also likely find themselves a target of the Chinese authorities; and,
- Rising tensions between China and Australia over China’s construction of islands and military bases in the South China Sea would meant that China was looking to fire a shot across the bow of Australia. Alistair says it is “ironic” that this has happened in the wake of Australia calling on China to abide by the rule of law.
Alistair concludes that the principle of “everyone does it” and the fact that the Chinese Government might turn a blind eye to certain activities of foreign companies only holds true until they start to enforce their laws. As he says, “The arrest of foreign business executives [in the Rio Tinto bribery case] was unprecdented [in China] until it set the precedent.”
The full article can be read here. Please note that a subscription may be required to read this article in The Australian Financial Review.