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The Sunday Paper – Why Multinational Companies Doing Business in China Fall into the Trap of Making Payments to China’s Police

A peek under the sleazy hood of China’s law enforcement agency the Public Security Bureau (PSB) today.

Mr. Daniel C. K. Chow from the Ohio State University’s Moritz College of Law has first hand experience of how foreign multinationals in China are shaken down by authorities that should be in the business of protecting them.

The problem is the PSB and it’s staff are rewarded for keeping the peace and tracking violent and destabilizing elements. Murderers, gangsters, drug barons and their like have good reason to be afraid of them. Penalties for ‘serious’ crimes in China regularly involve severe punishment, often death.

Counterfeiters and other intellectual property thieves are a low priority though for the PSB so when asked by a foreign multinational to pursue a claim they are poorly motivated; but, for a small initial fee, can be persuaded to look into the matter. This is where the problems start.

Notwithstanding theses ‘fees’ are illegal, possibly for both sides, they can grow beyond the initial payment if the investigation becomes complicated or requires another government organization to become involved. Mr. Chow was even asked for a U$10k bounty for each counterfeiter caught in a particular case (he wisely demurred).

The paper’s conclusion is unsatisfactory, the author admits, but the only right thing to do is under no circumstances pay money to the PSB for investigative work. Pursue your claim through the courts despite the fact that that’s unlikely to bring either swift or comprehensive redress.

You can read the paper in full via this link Why MNCs Pay the Police in China.

Happy Sunday.

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