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Corruption In China Through Social Pressure: Downfall By Chinese Wedding.

By Dan Harris and Steve Dickinson

I of course cannot prove it, but I am convinced (and I am not kidding here) that the failure rate for a business whose owner has gone to a Chinese wedding is at least ten times higher than for those who have not. Let me backtrack a bit and explain. The Quality Inspection blog recently did a post entitled, "Corruption of inspectors: the role of social pressure," discussing the "risk of corruption of inspectors in factories." The post posits that there are essentially two types of bribery. One is outright corruption where an envelope filled with cash changes hands. Inspectors know this is forbidden and engaging in it is risky. The other kind of corruption is where the factory treats the inspector so well that he or she feels obligated to "repay these favors." According to the post, this subtle pressure is very common and can be very effective. It then delves into the psychology of why people all around the world feel compelled to reciprocate and that this is sort of social pressure is stronger in China than in most other places: Now here's where the weddings come in and what I have seen as a lawyer who works on China matters. I do not know how many times my clients have told me that the potential evils I am predicting for their deal could never happen because they are really good friends with so and so....such good friends, in fact, that they attended his daughter's wedding. I am not kidding when I say I do not know how many times I have been told this as I really don't and I fear that I have exaggerated the number in my head because whenever I am told this or something similar, I just really bristle. And it happened earlier this week. I responded by saying that the his having attended the wedding actually made me more worried about something going wrong than if there were not a friendship between them and that because they are such good friends, it is even more important that they reach clear agreement on their relationship now so as to avoid problems later. My client thought about it and, to my surprise, agreed with me. This is not a peculiarly China phenomenon and I am not saying one should never "mix business with pleasure." But you should not allow friendships and weddings and social gifts to impede your business judgment and you should not for a moment believe that your having gone to a wedding means your business relationship will always be secure. For more on how getting all social and all can negatively impact your business, check out "The China Company Within A Company. Been There. Done That." Would love to hear your stories either reinforcing or refuting the above.

Full post as published by China Law Blog on March 04, 2010 (boomark / email).