China's toxic business culture: If you can’t beat 'em, bribe 'em

January 25, 2016 15:15
It’s not rare for Chinese firms to bribe rivals’ workers to gain access to confidential information and knowhow. Photo: Internet

DJI founder Frank Wang once said the biggest challenge to his company is theft.

Wang was not talking about petty crimes of stealing DJI’s drones or parts from factories; he was referring to company staff taking classified R&D results or product technology and selling them to rivals.

Paying little respect to intellectual property is arguably part of the Chinese culture. In the old days before the proliferation of chain restaurants, we often heard stories about how top chefs zealously guarded the secrets of preparing their signature dishes from their assistants. To this day, standalone eateries still pride themselves on their secret recipes.

These top chefs, and masters in other fields as well, were afraid that if they passed on all their knowledge and skills, their staff and apprentices would soon become their competitors.

In the modern business world, cases of employees “borrowing” the proprietary knowhow of employers to start their own businesses aren’t common, but incidents of selling it to rival firms happen every so often.

These corporate thieves sell out their bosses for anything from customer data base to product expertise.

On the other side of the coin, there is no lack of companies that has no qualms about "purchasing" their rivals’ technology as a cheaper alternative to in-house development.

At the outset, Wang was determined to change mainland consumers’ general perception that local brands are always inferior to imported products.

DFJ is now the global leader in the drones market, thanks to Wang’s insistence on research and innovation.

But he is a rare breed.

Wang admitted that he has to spend a lot of time battling with spy activities against this firm.

Chinese companies pursing Wang’s strategy not only have to watch out for corporate espionage, they also need to live with knockoffs.

Alibaba is often criticized for being a hotbed of counterfeit goods. A casual glance at the largest e-commerce platform in China reveals the scale of the fake product problem.

It is said that one reason why China is strong in basic manufacturing but still trails behind the United States, Europe and Japan in advanced, high-tech products is because of companies’ reluctance to invest in R&D.

Companies are not keen about pouring the time and money into making something original because they know there is a whole world of copycats waiting to take a free ride on their ideas and churn out a dime a dozen clones.

To this day, key components for products made (in many cases, just assembled) in mainland factories are imported, be it the latest iPhone or a simple ballpen.

For the second largest economy to realize its Made in China 2025 targets and become a true industrial superpower, the real hurdle lies in changing the mindset of the business sector, or, as Wang puts it, the “dog-eat-dog” culture.

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EJ Insight writer