Corruption in China's Marketing Departments

China Economic Review, a prominent English language magazine that reports on business issues, released a report in July of this year on corruption in China. The report focused on corruption issues across various corporate departments including the local marketing department of an international company. For those who are unable to access the report, the following is a brief snapshot of what was discussed.

The reporter interviewed a marketing employee working for a European brand whose manager was found to be receiving bribes from a local advertising agency for project work and promptly left his position at the company.

The marketing employee is quoted as indicating that this situation is not unique in China. “Shocked as we were, my colleagues and I thought it is fairly common for people in the industry to get certain benefits from suppliers.”

He points to the “fuzzy” corporate structures of foreign firms operating in China and the lack of independent procurement departments as providing considerable opportunity for local marketing decision-makers to be provided with bribes in return for supplier contracts. The report quotes him as saying, “ long as you are a decision-maker in a company’s marketing department, it’s nearly impossible not to receive benefits in some form from your suppliers.”

The report also pointed out that this form of corruption taking place in marketing departments is further exacerbated by the general perception among employees that receiving bribes is a low risk way of considerably increasing one’s personal income.

The marketing employee explains why this corruption can be considered low risk. “Normally these incidents aren’t discovered, unless someone reports them because of office politics. Even if the company happens to discover corrupt practices among its employees, there’s no incentive to dig too deep because revelations might hurt the company image.”

The report quotes him further offering reasons why many marketing decision-makers would be motivated to accept such bribes. “If your choice is between working hard and earning a meager salary or earning 20 times as much by accepting harmless bribes, I can’t image [sic] many will resist the temptation.”

The report exposes the fact that it is not very clear to local employees which behaviors can be considered corrupt. According to the employee interviewed, the degree by which corruption can be considered wrong is based on the amount of the bribe being received. He says, “I don’t think that taking bribes is a crime. For example, we help recommend friends for jobs and if they get them, our friends will take us out for a meal. The problem lies in the amount of money involved.”

As a party who continues to alert overseas market researchers regarding the issues that can impact the data quality of research projects being conducted in China, the following issues come to mind which may affect the execution of projects that are commissioned by overseas company headquarters with the local Chinese marketing team involved...

  1. If local research suppliers are selected by the overseas counterparts rather than the local marketing team, would the local marketing team be happy to provide the necessary support to research suppliers in order to ensure the successful execution of the project?
  2. If the local marketing team does not have any say in the selection of local research suppliers, will they be genuinely interested in helping the local research team to ensure the success of the research, or will they be trying to find faults or create hurdles in order to impede the smooth execution of the project?
  3. If the research suppliers are selected by the local marketing team and if bribery is one of the costs of operation, would the supplier still have sufficient funds to do proper fieldwork including proper recruitment, interviewer training, quality control, etc.?
  4. If the research suppliers are selected by the local marketing team and if the chosen suppliers are accustomed to these unethical business dealings, how ethical could they be expected to be when doing the actual data gathering?

Anovax is happy to see that this long existing issue in China is being publicly discussed and are hopeful that this situation will gradually improve so that the integrity of data, business conduct and market research can be maintained.