China and Russia: Hotbeds of Corruption

If China is really number 78 in the Transparency International Corruption Perception Index rankings, I cannot even imagine the corruption conditions in the countries ranked 79 to 178.   Russia stands at 154 out of 178.   It should not surprise anyone that China and Russia are perceived as highly corrupt business environments.

As former communist states, the underground or “black” market was a fact of life in the economies.  Underground payments were in fact nothing different than bribes and compensation outside the controlled market.  Bribes were a common way of life.  Gifts and other benefits were often given to government officials as a way to achieve results.

Is it really a surprise that once capitalism is introduced, bribery continues to be a way of lfie for the Russian and Chinese economies?  If anything, the incentive to get rich has created even greater demand for bribery.

Corruption permeates Russia and China.  To put it mildly, it is a compliance nightmare, with each country posing  significant challenges.  Even with such difficulties, I would never advise a company to avoid entering Russia or China, so long as it makes business sense.  While compliance may present challenges, they can be overcome. 

General strategies can be employed to make sure that compliance protections are built into the operations.  If a company builds a stronger compliance structure in a challenging environment, it cannot be held strictly liable for any violations.  However, if the company takes its cookie cutter out and just expands the existing program to cover its new operations in Russia and China, they are asking for trouble.

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