The Chinese government’s crackdown on corruption is more than a passing trend, as evidenced by over $700 million in fines levied on foreign firms in 2014 alone. But enforcement has been largely contained to domestic affairs, despite a law on the books forbidding Chinese companies from engaging in bribery abroad.
If Chinese prosecutors were interested in these abuses, one obvious place to start work would be in Africa. A survey released by the Ethics Institute of South Africa, “Africans’ perception of Chinese Business in Africa,” found that 61 percent of respondents report that Chinese companies engage in bribery and other illegal activities in their countries.
The survey measured African perceptions in number of areas, including the quality of Chinese products as well as the social, economic, and environmental responsibility of Chinese companies in Africa. Aside from corruption issues, the results of the survey showed that Africans, on average, have a negative or at least ambivalent view of Chinese companies in Africa.
While Africans recognize the importance of Chinese investment for development, they generally have reservations about the quality of products, labor conditions, and business practices. When combined, these concerns led only 24 percent of respondents to indicate that Chinese companies enjoy a favorable reputation in their country.
One of the main points that respondents made was that rather than hiring local workers and training them with the required skills, companies ship in Chinese workers. This not only prevents the development of the labor force, but also leads to unfair competition for local businesses. Also addressed was the idea that areas in which Chinese companies operate generally experience an increase in illegal activity such as logging and fishing. On top of all these concerns is the issue of bribery.
There is of course evidence that Africans themselves contribute to the problem. Like in many other countries, officials may engage in graft, demanding kickbacks and “facilitating payments.” However, according to the survey, Chinese companies are still more than willing to meet those demands and pre-emptively offering bribes. That applies to many non-Chinese firms as well that have taken part in corrupt schemes in Africa, especially in the extractive industries, as illustrated in this well-reported piece in The New Yorker about an ongoing Foreign Corrupt Practices Act investigation in the Republic of Guinea.
What can be done to improve the image of Chinese firms in Africa? Despite China’s law against foreign bribery, Chinese companies operate under the so-called “Beijing Consensus,” which stresses non-intervention in the sovereignty of any state. So a key step toward improving the conduct – and the perception – of Chinese companies in Africa is better domestic enforcement of existing laws and regulations across the continent. The challenge is to build these mechanisms in African states both through government action and grassroots efforts. The private sector in particular can work to implement local pacts, conventions, and codes of conduct that would help improve the business climate on the ground.
Another crucial development would be the enforcement of China’s own law prohibiting foreign bribery. While the majority of developed economies in North America and Europe are bound by legislation and conventions that prohibit bribery of foreign officials, the Chinese law remains only on the books.
There is growing international pressure on China to play by the rules in its international business dealings. For the sake of corruption-plagued societies in Africa – hopefully sooner rather than later.
Frank Stroker is an Assistant Program Officer for Global Programs at CIPE.