11/29/2010

Pluck up corporate courage in China

When Rio Tinto dumped the Australian Stern Hu in March and pushed him out the door with a news release slamming his "deplorable conduct", China-based executives at some foreign companies began asking whether they would also be cut loose if they found themselves in a Chinese jail.

The detention of Matthew Ng, a Chinese-born Australian citizen who founded the $100 million travel company Et-China, has added urgency to that question.

It should go without saying that Australian executives in China should conform with Chinese law and standards that would apply to them at home. 

The dilemma is judging when China's criminal system should be trusted to decide these standards, especially when there is a commercial dispute in the background.

An executive in China asks: "If the legal system is systematically corrupt, rife with economic conflicts of interest, and also subject to political interference, then how can companies know if an employee has broken the law?

"Then again, can a company operating in China realistically take a position that it will not recognise the results of the Chinese legal process? That also seems untenable. Not just politically untenable, but also because the legal system does in fact produce many legitimate results alongside many illegitimate ones."

Read more at  The Sydney Morning Herald

Nov 29, 2010 2:02:52 PM | Business, Current Affairs, Law

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