Foreign businesspeople tend to arrive in China animated by long multiplication. They envisage their sales in units multiplied by millions of customers and the burgeoning spending power of an ascendant middle class. But often they leave humbled by long division, their dreamt-of profits sliced and diced by unforeseen regulations, fees and murky “transaction costs”.
The journey from mathematical euphoria to despair is usually punctuated by the discovery that China is a very different place to do business. This realisation in some cases comes dropping slow; for others there are revelatory shocks.
The bribery scandal that this week enveloped GlaxoSmithKline, the UK pharmaceutical company, has jolted boardrooms around the world and prompted western businesses in China to re-examine their internal controls. On Friday, authorities were widening their probe into drug companies, with investigators visiting Belgium’s UCB.