Never mess with the US Feds, but what about China’s Reds? From Al Capone’s Depression era run-in with the Internal Revenue Service to HSBC’s money laundering settlement with Uncle Sam three years ago, American consiglieres and corporate counsels know that their employers confront federal authorities head-on at their peril.
Multinationals operating in China have been learning to contend with a similar challenge, as they are increasingly targeted by regulators who ultimately answer to the ruling Chinese Communist party. Should they complain loudly and publicly; fight fiercely behind closed doors; or capitulate quickly in the hope of reaching a relatively painless settlement?
Most companies caught up in Chinese investigations — most notably anti-competition probes launched by the National Development and Reform Commission — have concluded that discretion is the better part of valour. No company has complained publicly about what many see as the NDRC’s alleged bias against overseas groups or its tough tactics, such as discouraging executives from bringing lawyers to meetings.