According to a survey of Hong Kong businessmen, the costs of 'gifts' and guanxi inflate the costs of doing business in China by 3 to 5 per cent. The research was commissioned by Hong Kong's watchdog, the Independent Commission Against Corruption (ICAC) amid concern that corrupt business practices that are now thriving on the mainland could have an impact on Hong Kong after 1997.
The report focused on Hong Kong companies which have manufacturing factories on the mainland. Of the 50 companies that completed a questionnaire, 35 admitted paying bribes of HKdollars 10,000 to HKdollars 500,000 ( pounds 860- pounds 43,000) 'They (Hong Kong businesses) face the cultural difference that people in China take guanxi as essential and normal,' said the report. 'It is commonly recognised as a means to get things done.'
The Chinese concept of guanxi is based on the primacy of good personal relations. In a business environment, this means putting considerable effort into establishing a firm rapport with prospective business partners.
At the legal end of the scale this demands lavish banquets with exotic food; but in other circumstances it can mean stashing cash in a foreign bank account in the name of a corrupt official in order to secure the go- ahead for an investment project.