Beijing's antigraft crackdown forces foreign firms to rethink business practices in China
Recent scandals have highlighted multinationals' hiring of princelings, putting pressure on Beijing to crack down on murky corporate practices
Creating guanxi – relationships or connections – used to be a reliable way for multinational firms to break into the China market.
Several big names, including two of the world’s largest financial institutions – JPMorgan and Zurich Insurance – and GlaxoSmithKline, one of the largest drugmakers on the planet, have been caught in the media spotlight this year and a subsequent public outcry about their business methods in the country.
Some of the alleged breaches of business ethics were old news to many but suddenly became a hot topic in the past few months following government investigations and complaints from the public.
There had been many signs Beijing had begun to take corruption more seriously than ever since Xi Jinping succeeded Hu Jintao as China’s president in March.
Xi has repeatedly pledged to fight corruption, which is often linked to senior executives at powerful state-owned enterprises or senior government officials’ relatives, often known as princelings.