China Esquire

I have been following the coverage about the baseball scandal on and off now. For the sake of disclosure, I am a Yankees fan, and therefore, a Clemens fan as well. Now that I have said that, watching this ordeal unfold has been rather frustrating for me. Why? Because over time, one thing has become obvious: everyone was doing it. Okay, not everyone, but many people. It wasn’t just the superstars: the role players were doing it too.

It feels so un-American to admit that everyone was cheating. CNN noted that Brian McNamee, who allegedly helped Clemens take illegal substances, had this to say:

McNamee said he believes he stopped giving baseball players performance-enhancing substances in 2002. He called steroid usage “pretty prevalent” among players at the time.

Grilled on why he provided players with such substances, McNamee replied, “I just accepted it as the norm, and it was part of the culture in baseball.”

It is ironic that often a chief complaint I hear about Chinese businesses and networking in China is that everyone cheats. But the more I understand business in China and America, I want to say this: this is not a Chinese problem. This is a problem for everyone. (See also this post by China Law Blog some time ago about how all businesses are alike)

A friend of mine told me about an American technology company where the general counsel’s role was not only to do the SEC filings and review contracts, but also to be a “yes man” for the executives. Executives would approach their counsel with scenarios that were often in the gray, if not straight up illegal, and try to get counsel to sign off on the business decision. Obviously such decisions would save the company money, would make it more competitive, etc. But it was also because “everyone else in the industry does it this way.”

Since when did general consensus become the standard for an attorney’s legal advice? Never. And it should never. So when your clients tell you that everyone else in China (or anywhere else for that matter) is cheating, paying bribes to local officials, and cutting corners, should you advise them to do so? No. Inevitably someone will ask you, so be ready to say “no”.

I refer you to an old post at Going Global:

Frequently when I meet with a business person contemplating export entry or the development of operations in a new foreign market they eventually get around to asking about corruption. They ask how bad it is, usually in a voice that is suddenly more nervous. My sense is they’re nervous in part because it’s a subject they haven’t had to confront so directly in their domestic business dealings. But I also sense a bit of nervousness due to what seems to be a percolating realization that if push comes to shove they might feel compelled to go down that road, or at least look the other way while one of their foreign agents does the dirty work for them. “What else can we do?” they wonder.

The simple answer is to just say “No!” There are plenty of good reasons for this. One of course is legal. Under the U.S. Foreign Corrupt Practices Act, it is a criminal act for an American company to obtain business through bribery. Do you really want to go from being an American business person to an American criminal to make a few more bucks? Hopefully that’s reason enough, but there is more.

A second reason is that you can become a hostage to your foreign partners / customers / suppliers / competitors. Most foreign counties also have laws against corruption, and while enforcement may be lax, they are far more apt to be enforced against an alien corporation in response to a complaint by one of their citizens. I don’t know how many times I’ve heard stories of companies that were led down the primrose path by their local agent only to be turned into the local authorities when the relationship starts to go south. Needless to say, this is not a good position to get yourself into.

One more reason is that China has been cracking down on illegal business practices against foreign corporations. (though they seem to ignore local companies doing it) I am sure you probably have read story after story where China has been far from merciless to American and multinational corporations.

Bottom line: Just don’t cheat–even if everyone else is doing it.

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