Showing posts with label GlaxoSmithKline. Show all posts
Showing posts with label GlaxoSmithKline. Show all posts

Friday, September 13, 2013

China Tells Businesses: Don't Mess With Us

Flexing it's legal muscles,Beijing's slew of high profile investigations and fines have made foreign business owners in China decidedly skittish these days.  After launching a number of probes into the dealings of  international organizations like GlaxoSmithKline, the Chinese government is sending a more hardline message that the Party isn't going to take any crap from anyone.
In a BBC interview with Juliana Liu at the World Economic Forum's conference in Dalian, China, Mr McGregor, a former journalist who has lived in the country for more than 25 years, said China's behaviour was "very worrisome" for foreign companies. "They don't know what's hitting them right now", he said.

It's a tricky balancing act to maintain.  With little in the way of world beating innovation, or domestic brands that have made inroads overseas, big international operations bring much needed investment and employment opportunities.  Reassuring those who haven't already set up shop here that China is a land ruled by the law is crucial to entice dubious entrepreneurs that their products and services won't be ripped off by a Chinese competitor at the earliest opportunity.

Of course, the problem is the selectivity with which the law is actually enforced with.  Chinese companies have rarely fallen foul of anti-competition laws or have been placed under the same scrutiny as their western counterparts.



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Tuesday, August 27, 2013

Fraud Investigators Arrested For Investigating Fraud

More details are emerging on the arrest of fraud investigators Peter Humphrey and Yu Ying Zeng who have been arrested for (and we wish we were joking about this) violating the privacy of Chinese citizens.

According to the official account on Xinhua, around 500 reports compiled by the married couple violated privacy laws, giving details of exits and entries by Chinese citizens, as well as address, phone numbers and information on real estate deals.  The couple were detained on July 10th, as they were investigating the GSK bribery scandal.

A video showing the apparent confession by Humphrey has been posted on the CCTV website, "I sometimes used illegal means to obtain personal information.  I very much regret this and apologize to the Chinese government.".  A number of commentators said that the man who made the confession had his face blurred, and it was not possible to confirm his identity.

The arrest has a chilling effect on the already skittish foreign consultancy and advisory community in China.
“When I started in Hong Kong in the early nineties, you had people who were China consultants, and whatever you wanted do in China, they could help you do it,” said Jeremy Gordon, the founder of China Business Services. “Now, China has become such an important part of the economy, and everyone needs to be there, so you have specialized people to do specific things.”

A smug Xinhua editorial proclaimed that "Whether it's a Chinese person or foreigner engaging in illegal activities, public security organs will firmly crack down without holding back," although the privacy laws that have been updated are broad enough to probably do more harm than good.  Earlier this year, 89 private detectives in Hubei Province were raided, and another 74 were the target of a police crackdown in Chongqing.  The Shanghai based firm run by Humphrey and Yu, ChinaWhys, was described in official Chinese reports as a "illegal investigation company.”

A spokesman for the United States Embassy in Beijing, Justin Higgins, said consular officers had visited Ms. Yu on July 16, soon after she was first detained. “We remain in contact with Ms. Yu and will continue to provide consular assistance,” Mr. Higgins said. A spokesman for the British Embassy in Beijing said he had nothing more to say at this stage.

 


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Thursday, August 1, 2013

Chinese Brain Drain Not Likely to Improve

The Chinese brain drain, according to the China Daily, is one of the worlds worst. It’s not good news for a country that is desperate to establish itself as a world leader in science and technology.

The Chinese love modern drugs. Antibiotics are especially popular, with Chinese patients popping ten times the number of pills that Americans do - nearly 140g a year per capita. GlaxoSmithKline’s bribery scandal shows how much money can be made by pointlessly prescribing useless drugs. Accused of bribing doctors to prescribe more of GSK’s own products, the Chinese entity stands accused of spending nearly £320m to cater to the whims of doctors.

The ease of which doctors can dole out antibiotics also highlights the low penetration of even basic scientific understanding in China. While the cash-strapped doctors who are told to prescribe more expensive drugs for minor ailments certainly bear most of the blame, the patients that demand better care (that is, more drugs with impressively complicated names) aren’t entirely innocent either.

While it’s easy to paint the underpaid doctors as the bad guys and point out that patients are just following the directions of their physician, a study from the Ministry of Health, showed that patients who knew the basic ideas behind what works for a viral infection, or what won’t work for a bacterial infection were less likely to be incorrectly prescribed antibiotics. "A simple intervention in which patient's display of knowledge about appropriate antibiotic use can dramatically reduce the abuse of antibiotics," the report found, also noting that if patients asked if they really needed the medicine they were being prescribed, the relationship they had with their doctor rapidly “deteriorated”.

The Chinese government is desperate to promote scientific theory across the country. It’s no small challenge by any stretch of the imagination, especially considering that during the Cultural Revolution academics - including scientists - were attacked as being bourgeois and were sent to labour camps. For almost a decade, no new scientists were trained and all academic research ground to a halt. It’s this 10 year period that partly explains the desperate measures some Chinese parents go to when the gaokao rolls around every year - it’s the only chance to guarantee an education for the child that their parents never had the chance to get.

Forty years on, China has the money and the equipment, but still lacks when it comes to the actual talent. The outcome-oriented culture has given rise to a situation where highly qualified scientists are reduced to operating equipment making medicines that right now are selling like hotcakes, but, given the alarming rate of the spread of drug-resistant bacterias, might not be so red-hot in the next ten or fifteen years.

At the end of July, the Chinese scientific community could hardly contain itself when news came from Guangzhou that a team of researchers had manage to create teeth from stem cells collected from urine. Buried at the bottom of the press release, the team also pointed out that the teeth were about 1/3 the hardness of real teeth. Professor Chris Mason of University College London was underwhelmed by the development, telling the BBC "It is probably one of the worst sources [of stem cells], there are very few cells in the first place and the efficiency of turning them into stem cells is very low. You just wouldn't do it in this way.” A damning critique that shows Chinese researchers aren’t even doing it wrong.

It’s the closed system, boring work and relentless pursuit of profits that has made many scientists are researchers shy away from professional life in China. When asked, an alarming 87% of Chinese graduates said that they had no plans to return to China in the future.

By contrast, in Denmark, where 1 in 10 scientists at the Technical University of Denmark, the dean, Martin Bendsøe, is under no illusions as to what attracts top flight Chinese talent out of their homeland. Speaking in an interview with ScandAsia, he said ”They come here because we are often cited in international scientific articles. After some time many open their eyes to the advantages of the democratic Danish management structure and the work environment,” said Dean of the Technical University of Denmark, Martin Bendsøe. Chinese scientists make up the third largest demographic after Germans and Americans.

The story is the same the US. Speaking to the China Daily, Joseph Jen, former undersecretary for research, education and economics for the US Department of Agriculture, said “Chinese institutions have new research equipment, much of it better than at places in the US” but that many Chinese “choose to stay in the US is because of the scientific culture ... (in which) scientists have bigger freedoms to pursue research of their choice.”

When it first started allowing students to travel abroad to study, many high-ups in the Chinese government were afraid that the end result would be that once exposed to the high life in the US and other western countries, they would never want to come back home again. For once, their foresight is pretty much bang on the money - not many want to leave the dynamic world of American research. Showing their trademark two dimensional thinking, a plan to lure back scientists was unveiled in the 1994 that promised tax breaks for returning academics. In the 20 years since, a mere 1568 have taken advantage of that particular carrot, this project being only one of seven misfires that have woefully missed their targets.

Once back in China, Chinese scientists face major roadblocks to developing their research into functioning businesses. An underdeveloped credit system and reliance on the “it’s not what you know, but who you know” guanxi system as well as hobbled and patchy small business framework simply doesn't give anyone the confidence to innovate or invest in Chinese startups that focus on risky new ideas rather than copying the ones that are already successful - exactly what the Chinese government wanted to avoid by sending students abroad in the first place. As Nixon’s War on Cancer showed, nothing much comes of top-down directed research, but since the Chinese government is averse to anything resembling real market competition, it will be a long time before we see anything of great interest emerge from Chinese research labs.
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