The Advantages And Disadvantage Of Bribery Economics Essay

The enterprises or merchantmen have different views on bribery under different circumstances; sometimes the different nations with different background have completely different ideas. In some places, people’s attitude is slightly loose to bribery, while in other places, such as in the United States, people look down on this act in public, but they do not clean themselves. In spite of the public’s tolerance for bribery, there are not a national people will agree that powerful people can hurt the public’s interests (Joseph A. McKinney, 2008). “Corruption and the Global Economy,” said that “both the developed and developing countries, whether the so-called democratic countries, or dictatorships, corruption almost exists everywhere.” In order to obtain some profits, such as the market access, policy benefits and scarce resources, whether multinational or local companies adopt all means to improve the relationship with the government and the government officials, which affirmed the existence of a large number of illegal acts (Mathias Nell, 2009)? Former Indonesian President Suharto, former South Korean President Chun Doo Hwan and Roh Tae-woo, former President Abacha of Nigeria, former President Ferdinand Marcos of Philippines, former Mexican President Salinas had stepped down because of corruption and bribery, in these famous events, there are many multinational presences. In this essay, it will firstly discuss the advantages of bribery by an actual example. Further, it will introduce the disadvantages of bribery with making out an unfeigned instance. Finally, it will summarize that the bribery plays a role in the international business.

The advantages of bribery

A few years ago, the survey that the World Bank on the 3600 foreign trade companies in the earth showed that there are 40 percent of companies did business through bribery in 69 countries. It is estimated that the corruption fund account for 10 to 20 percent of the total amount of the global business, some companies’ bribe money reached 100 million dollars (Carl Pacini, 2002). However, in fact, there are not many cases of transnational bribery which have been exposed, while there are few of punishment.

China has become the most potential and the fastest growing emerging market in the world, particularly in the past decade, the import and export trade and the direct investment from the multinational companies were rapidly develop. To quickly open the Chinese market and make huge profits, the multinational companies not only exhibit their fund advantage, technical superiority and management advantages, but also show their bargaining power that convincing the relevant Chinese authorities and enterprises, even including adopting the bribery. All business books relevant to do business in China would warn the occidental the importance of the relations, which often means paying bribe for the government officials and the leaders of state-owned enterprises. There is no one doubts the existence of bribery, while there is almost not a multinational company admit encountering such a thing, all public interviewed west managers have denied that they had been extorted or bribed.

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Procter & Gamble which is one of the best developing multinational companies has set up in China over 20 years. Currently, P& G with its multi-brand advantages has occupied 60% of Chinese commodity market. Any other company can hardly achieve such success, the secret of success is the strong capital, strong research team of P& G, but almost no one can guarantee that there is no the suspects of bribery.

The “Chinese dental treatment group certification” message was printed on the shell of Procter & Gamble’s Crest brand toothpaste, which has convinced Chinese consumers, so this brand toothpaste was in popular. However, But in 2007, the Ministry of Health publicly said the investigation of Chinese dental treatment group certification and economic problems, P & G was quickly drawn into the whirlpool because of its close relations. P & G has been reported that it donated 10 million Yuan to Chinese dental treatment group, while it also allowed enterprises and institutions related to public interest in donation or sponsorship between the names of the financial transactions to be concerned. Although P & G quickly responded, said the money was donated to the Chinese Foundation of dental prevention and treatment for promoting oral health, which has nothing with the certification of Crest toothpaste. However, this approach immediately attracted greater challenge.

It is understood that Dental Prevention and Treatment Foundation and Dental Treatment Group even to be a pair of twins, the Foundation is established based on Dental Treatment Group, and in turn, the Foundation support the public activities of Dental Treatment Group with its received funds. From this, there is nothing between donations and “certification” according to P & G, which is purely sophistry. Procter & Gamble donated 10 million Yuan to Dental Treatment Group or its brother agencies, which can not have any relation with the long-term. If the two sides had not volunteered admit the information, and without documents and other evidence to prove a causal relationship between them, then the law can do nothing. On the other hand, if we can prove that P & G’s contributions related to the dental certification, then the Dental Treatment Group and Procter & Gamble have a commercial bribery and should take legal responsibility. Obviously, no one will take the initiative to admit commercial bribery. Although P & G had some implications in this matter, but this did not affect their normal interests, on the contrary, it greatly increased its advertising effect to increase its sale. The Dental Treatment Group certificated Crest toothpaste’s efficacy, which recognized the prevention and treatment of their products. Procter & Gamble obtained profits is far more than 10 million Yuan from the event.

The disadvantage of bribery

Since the reform and opening up, China’s real estate industry has been rapid develop, so the demand for steel continues to rise, while the raw material iron and steel – iron ore is the competed objects by Chinese steel mills. China is the largest iron ore importer in the world, but China has been in a passive position in the price negotiations of iron ore, because Rio Tinto, BHP Billiton and Brazil’s CVRD monopolized 70% of the global iron ore. With the growing demand and intending to seek more ways of importing, China has started to increase its iron ore imports from other countries (Christopher Baughn, 2010). Although the amount of the small country’s imports are increasing, the Australian ore and Brazilian ore are still the main sources of Chinese iron ore. Thus, the ceaseless contest has been started between China and the three mines. The case of Rio Tinto spy is a typical example in July 2009.

According to the media reports, the computers in Shanghai office of Rio Tinto was taken away by the related departments has dozens of steel enterprises’ information which have a long agreement contract with Rio Tinto. The information is concerning the enterprises’ detailed stock plans, raw materials inventory, production schedules and other data, including large steel enterprises’ monthly steel production and sales. There are no more than 10 people know about all the details of Chinese steel production process. Mining companies can master these secrets; it may be pay bribe for the specific operators of the relevant enterprises. The insiders said the “emotional communication” between the mining companies and the steel companies is very close, in addition to the normal business commission; a number of mining companies would be necessary paying bribery for the relevant personnel.

March 29, 2010, at the Shanghai No. 1 Intermediate People’s Court worked out the first instance verdict on the Rio Tinto case, which identified Stern Hu, Yong Wang, Mingqiang Ge and Caikui committed non-national staff of accepting bribes and violating commercial secrets crimes, were sentenced to their term imprisonment ranging from fourteen years to seven years. Although the end of this bribery case, it left people many reflection. Many people give away the national interests for some petty profits, while Rio Tinto is not a separate company in the case; it represents the interests of the three mines. Rio Tinto case not only damaged the friendship and mutual trust between China and Australia, and mutual trust, but only involved in China’s commercial secrets.

Transparency International

There is not the Global anti-corruption or bribery legislation yet, but the regional legislation is playing an increasing role. Since 1993, a named “Transparency International” international organization determined “through the international and countries cooperation to encourage the Government formulate and implement effective laws and policies to hold out corruption”. Transparency International carried out a large number of activities, a very important activity is investigating the businessman, the political analysts and the public around the world to determine the perception of various countries’ degree of corruption from the respondents. The corruption perceptions index is the international access targets for evaluating the degree of a country’s corruption (Table 1).

Table 1: Corruption perceptions Index 2009 (from http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table)

Country

CPI 2009

Country

CPI 2009

New Zealand(1)

9.4

United stated (19)

7.5

Denmark (2)

9.3

China (79)

3.6

Singapore (3)

9.2

India (84)

3.4

Sweden (4)

9.2

Russia (146)

2.2

Switzerland (5)

9

Iraq (176)

1.5

Australia (8)

8.7

Afghanistan (179)

1.3

Japan (17)

7.7

Somalia (180)

1.1

From the table, it is concluded that the Nordic countries possess of the highest ethical standards, the Asia’s Singapore is known as a model for the world’s anti-corruption, the members of the Organization for Economic Cooperation and Development also has a strong anti-corruption efforts, while Asia, Africa and some Latin American countries most affected by corruption (Carl Pacini, 2002).

The companies of United Stated would be prohibited by the state law if they pay bribe in foreign. Back in 1997, the United States promulgated the “Foreign Corrupt Practices Act”, took the lead in working out disciplinal provisions about multinational companies paying bribe for the host countries’ government officials (Margot Cleveland, 2009). Despite the subsequent time, few cases of punishment of transnational corporations, the American multinational companies also considered “harming the interests of U.S. companies in foreign countries, affecting U.S. companies competitive abroad.” U.S. Commerce Secretary said that the American companies lost 64 billion dollars business within a year, because of anti-bribery and anti-corruption. The American enterprise which has been still pay bribes has been marked decreased. However, many multinational companies are still trying bribery, because the contract is too attractive.

At now, the member countries of the Economic Cooperation and Development Organization and the Organization of American States are the most effective anti-corruption countries; it can not have bribery activities when people opened offices in those countries or making the global marketing business. Government officials in these countries have higher moral standards. In Asian and African countries, bribery is much more common. General estimates, the multinational companies gave the government officials’ kickbacks account for 15% of the total income when the global companies operated in Asia. Although bribery is illegal, each company had to work to pay bribe.

Conclusion

In conclusion, this essay clearly discussed the advantages and disadvantages of bribery from clear from the positive and negative sides. In fact, we all know the advantages and disadvantages of bribery, if paying bribe is successful, then the person or group will get their hoped interests; if paying bribe is fail, the briber and bribe will be punished by the related law. Although, there are the stringent laws in this regard in every country, many people go to pay bribe and corrupt at risk and at all costs in the driven of interests. Multinational bribery is not a national issue, this is a global issue. There should be some organizations such as Transparency International in each region or country, together with the local government to develop and implement effective laws and policies to put down corruption. International and the countries’ bosom should strengthen cooperation in order to effectively keep within limits corruption. Multinational bribery is not an isolated phenomenon, only when the powder large-scale is away from the economy, the legal system is more robust and the social atmosphere is better, it will be got the basic reverse, it also requires the joint efforts of all mankind.