BEIJING, July 17 China must crack down on
commercial bribery by multinational firms, the country's top
state paper said on Wednesday, two days after police accused
British drugmaker GlaxoSmithKline of the widespread
bribery of Chinese officials and doctors.
In a commentary, the People's Daily newspaper accused some
multinationals of using their market dominance to exploit gaps
in regulatory systems in developing countries.
The article suggests Chinese authorities are not about to
step back from a spate of investigations launched in recent
months into how foreign companies do business in China, from the
setting of prices to quality controls.
"A crackdown on commercial bribery by multinationals is
deeply significant to safeguarding the order of the market
economy and protecting an environment of fair competition," said
the commentary in the mouthpiece of the ruling Communist Party.
Chinese police on Monday accused GlaxoSmithKline of bribing
officials and doctors to boost sales and raise the price of its
medicines in China. Police said GSK transferred up to 3 billion
yuan ($489 million) to 700 travel agencies and consultancies
over six years to facilitate the bribes.
In response, GSK said it was deeply concerned by the
developments, which it called "shameful".
A second commentary in the People's Daily said China must
"lift a sharp sword to pierce the improper, even illegal, costs
behind rising drug prices" for which multinationals, such as
GSK, were responsible.
The first article said the GSK case was an illustration of
"the commercial anti-corruption struggle" in China. Project
bidding and tax systems for multinationals were also
problematic, the commentary said, without giving details.
"In recent years, some multinationals have utilized strong
market and technological advantages, operated through
intermediary agents, and taken advantage of the imperfect
regulatory system in developing countries to drill loopholes,"
the commentary said.
FOCUS ON FOREIGN FIRMS
Some experts have suggested China may be expanding an
anti-corruption drive beyond government ranks and domestic
companies including state-run entities, focusing now on foreign
China has targeted foreign firms on multiple fronts in the
past few months, although the probe into GSK is the only
high-profile, publicly known investigation focused on bribery.
European food companies Nestle and Danone
said early this month they would cut infant milk
formula prices in China after Beijing launched an investigation
into the industry.
Chinese media has been giving the GSK story plenty of
On Tuesday night, state broadcaster CCTV night aired an
interview with one of four detained Chinese executives from GSK.
Liang Hong, vice president and operations manager of GSK
(China) Investment Co Ltd, offered details on how he funnelled
money through travel agencies by arranging conferences, some of
which were never held.
"To have contact with some government departments you need
money that you cannot normally expense to the company," Liang
said during the broadcast.
Liang said he paid bribes to officials from the powerful
planning agency, the National Development and Reform Commission
(NDRC), and the Ministry of Labour and Social Security, which
are among those required to get medicines approved or prices
It is rare for state TV to carry such interviews, although
state news agency Xinhua had earlier been given access to Liang.