Was GlaxoSmithKline doing just too well in China?

The admission last week by GlaxoSmithKline, after claims of misconduct by Chinese authorities, that staff of the massive pharmaceutical company "appear to have acted outside of our processes" seems like a hasty climbdown. But it raises a deeper question, and one that companies such as GSK which are doing well and are in important sectors in China will almost certainly have to face more in the future.

There are plenty of risks which lead to a foreign multinational doing poorly in a complex business terrain like China's. But there are also pretty grave risks that come from doing too well. GSK's recent plight falls into the latter.

Demand for good-quality pharmaceuticals can only increase in the coming years as society in China ages, people become more demanding about their health care, and the health systems grows. GSK has worked in the local market in one form or another for over 20 years. Its profits are good, and are likely to get better. This is something that the authorities must be irritated by. Having a key sector like this dominated by foreign players is not in the long-term game plan. But the simple reality at the moment is that no Chinese company can do what GSK currently does.

One of the greatest paradoxes of the modern world is that the last major communist party reigning on the planet is also the entity with the strongest sense of the importance of profit. This gives the party an unsettling similarity to organisations that superficially look utterly different to it.

A couple of years ago I visited Facebook's headquarters in California. The company exuded a powerful air of self-satisfaction. A senior executive bragged that whatever the public criticisms of its use of private information, and its mode of business execution, there was one thing that silenced all this - it had close to a billion users. Sitting on an asset like that, the world could carry on complaining.

There was one moment during that meeting, however, when a slight note of self-doubt crept in. On the wall was a map showing Facebook's penetration across the planet. Every continent and territory had bright little dots showing where users were. It seemed they reached even into the most remote and sparsely populated parts of the globe. But smack bang in the middle of this map was a huge dark hole - the People's Republic of China. There were no little dots representing faithful Facebook users there since it was blocked by the Great Firewall.

We might think that Facebook is locked out of the Chinese market because of censorship issues and the way in which social media were linked to protest movements during the Arab spring from 2010. But that is only half the story.