Industry News | March 30, 2009

Recession Means Corruption for Companies Abroad

Many companies are finding that they must act now to mitigate the increase of corruption as the recession bites.

Operations in emerging markets are at even more risk. Away from the governing arm of the corporate headquarters, companies operating in emerging markets such as China, need to be extra careful in protecting their brand.

It is the pace and scale of growth in emerging markets such as China that has increased opportunity for corruption to rear its head in business supply chains.

Corporate inexperience in compliance regulations make the task of implementing anti-corruption programs in China even more difficult for companies operating there.

The new research by Ethical Corporation Institute, 'Counter Supply Chain Corruption in China' reveals that the best way to prevent corruption-related risk in supply chains is to set up and maintain effective in-house programs. These should aim to implement compliance codes and evaluate supply chain partners based on ethical and compliance criteria.

The report finds that the Chinese government is making a concerted effort to reduce corruption by introducing new legislation. However, statistics from 2003 which state that 73 percent of companies surveyed reported they expected to pay "facilitation payments" still hold true.

'Counter Supply Chain Corruption in China' found that the Chinese government holds the operating company ultimately responsible for securing their business supply chains. There are tough penalties for those who let corruption into their operation.

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