Hey all, I'm a lawyer and I recently spoke with a Chinese client about the differences between doing business in the U.S. and in China. His opinion surprised me a little bit.
He said that in China it's necessary to pay lots and lots of bribes to get things done. According to him, getting permits and approvals typically involves taking local and provincial officials out to expensive dinners and slipping them cash in envelopes.
Here, he says he's had to pay only one bribe - to a building inspector in a state on the east coast. However, he's had to pay lots and lots of fees (mostly attorneys fees, but also fees for architects, city engineers, inspectors, etc.). Overall, his opinion is that these fees add up to more than the bribes he would've had to pay in China.
Lawsuits by disgruntled employees are the biggest source of the client's fees. For example, a single FLSA claim (which might involve only several hundred dollars in backpay) can easily cost $20,000 to defend.
Additionally, he mentioned that it's just a lot easier to pay a bribe and be done with it - as opposed to sitting through depositions, divulging records, and sitting in on numerous conference calls with lawyers.
I'm not saying a bribe-based legal system is better than what we've got. Not at all. I just think it's interesting that it can be easier for employers to navigate that environment. I'd always thought that system was far more exploitive and suppressive of business (at least small business).
Of course, the ease to the employer is not the only consideration. We have a robust legal system that allows employees, vendors, and third parties to vindicate their rights - rights which would be cast aside if a local official could simply waive them away after receiving a bribe.
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Yup, it's same thing. The main difference is that in the West we have made the corruption less conspicuous. In Asia, the whole economy operates essentially according to the "Guan Xi" (social capital) concept, built on relationships. It the same in ALL Asian countries, although the system likely originated in China and then moved outwards, as the Chinese have always been the main merchant class which has been (and still is) the foundation of the economy in the whole region. In the West we have turned bribery into "fluffy" fees, which are CERTAINLY NOT so "fluffy" when I have to pay $20 USD to withdraw $500 via cash advance from my US bank (out here in Asia). Your Chinese friend is probably right that it ends up costing MORE in the West in the end. I think the MAIN reason for this is that in the West you don't have the additional benefits which come from the social aspect of the whole process (as it exists in Asia)...
Be careful - when your "connections" don't have the right CONNECTIONS - property can be confiscated, buildings can be torn down. All because they were done improperly or illegally - through bribes and other "under the table" connections.
My brother-in-law banished himself from Yulin after the mayor he gave "bribes" to was executed for failing to execute his duties WITHOUT receiving bribes.
Rights can only be vindicated to the extent the victims can pay the transaction costs. The American system just like the Chinese system is full of significant market distortions. Bribes, just like government licensing--that does nothing productive--just cost consumers more and is kleptocratic.
I think eliminating the state's claws to steal arbitrarily is the best solution. Imagine how much better off Chinese and Americans alike would be if the products they purchased did not include paying these thieves?