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gift-or-bribe-in-chinese-businessGift or bribe?  If you’re doing business with China, where do you draw the line?

Business-related gift-giving is common throughout the world.  Yet the frequency, value and kind of gift can vary widely.  What one culture sees as normal may look like bribery from another perspective.  On the other hand, not giving gifts when they are expected can hurt business relationships and hence results.

China is certainly perceived as ‘more corrupt’ than Australia. Transparency International’s 2012 Corruption Perception Index ranks Australia 7th out of 176 countries and territories, while China just scrapes into the top 50% with a ranking of 80th.  This Index focuses on public sector corruption – but in China, with so many State-Owned Enterprises, that’s not very limiting!

The Legal Position

Bribery is illegal in both Australia and China.

The Australian Criminal Code Act 1995 forbids the bribery of foreign public officials and Commonwealth public officials ‘for the purpose or obtaining or retaining a business advantage’.  China’s Criminal Law is more wide-ranging and less precise in its wording.  It covers not just public officials but any ’employee of a company, enterprise, or other unit (organisation)’, and prohibits giving, soliciting or accepting property for the purpose of ‘improper benefits’.

Another piece of Chinese regulation, the Anti-Unfair Competition Law, extends the meaning of “property” to include cash, tangible property, marketing fees, promotion fees, sponsorship fees, research fees, service fees, consultation fees, commissions and reimbursements as well as travel inside or outside China.

Major multinationals such as Rio Tinto and GlaxoSmithKline have been caught up in bribery scandals in China, along with many local companies.  While some of the cases may be partly driven by politics, it’s still important to take care with gift-giving in China and not expose your business and yourself.

The Cultural Position

In a way, it’s not surprising that the Chinese laws are less precise and more ‘slippery’ than those in Australia.  The concept of a universal, impartial body of law is less developed in China than in the West.  Throughout Chinese history, authority has rested very much with individual local officials, with little reference to a central ‘law’ or a higher court.  With less ability to appeal to a higher authority, the Chinese have generally relied on building a relationship or network of relationships (guanxi) to help protect their rights.  Gift-giving is an integral part of this system.

Gifts show respect and ‘give face’.  But accepting a gift also means accepting some sense of reciprocal obligation.  Connections are established.  In this way, gift-giving builds a network of trust and mutual obligation, which helps maintain stability when the law is more arbitrary.

What Approach Should you Take to Gift-giving in China?

If you visit China, you will be entertained and given gifts.  You will need to give some back.  The following tips will help you give gifts, not bribes.  They’ll help you make good gift choices, too!

  • Very expensive gifts may be considered as bribes.  Cheap ones show no respect.  If you’re traveling with Hornet, our staff can give you advice.  The value of gifts given to you is also an excellent guideline.  Gifts of matching value also tend to keep relationships in balance/
  • Choose gifts which can be shared by all the staff rather than something for an individual.  You can also give lots of small gifts so there is one each for the staff.  In this case make sure they are of near equal value so you are not giving more status to one person than to others.
  • Something which represents your home country or region is ideal.  For Australians, this could be macadamia nuts, or Tim Tams, or an Aboriginal painting to hang in the office.
  • Alcohol, tobacco, tea and fruit all make good gifts.
  • Never give sets of four.  The Chinese words for ‘four’ and ‘death’ sound similar.  Eight, on the other hand, sounds like ‘fortune’, so sets of eight are good.
  • Don’t expect your gift to be accepted the first time.  You may need to offer it three times.  The Chinese do not want to appear greedy.
  • If you offer a gift more than three times and it is not accepted, stop offering.
  • Your gift may not be opened while you are there.  Once again, this is seen as showing greed and too much interest in the gift.
  • Certain items should be avoided as gifts, including clocks, fans and green hats. (A green hat traditionally means your wife is unfaithful!)

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And perhaps the most important guideline of all when you need to decide whether something is a gift or bribe:

‘a gift can be disclosed, a bribe needs to be concealed’.

 

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