Rule of law benefits British investors in China

(Xinhua) Updated: 2015-10-16 16:39

BEIJING - Since GlaxoSmithKline (GSK) announced a deal to produce HIV medicine with Shanghai firm Desano Pharmaceuticals in July, Britain's biggest drug maker is taking more steps to repair its scandal-hit business in China.

"I hope we can come out of the shadow of that," said Andrew Witty, chief executive of the pharmaceutical conglomerate in an exclusive interview with Xinhua ahead of Chinese President Xi Jinping's state visit to Britain.

Chinese authorities fined GSK China a record 3 billion yuan ($472 million) in September last year for bribing doctors, and executive Mark Reilly was handed a suspended prison sentence.

"It was a very sad and challenging period for us. We have worked very hard to learn lessons from that," said Witty.

Though the bribery case has hit GSK's sales in China, the British drug giant still sees the country as an important source of future revenue.

"Our strategy is undiminished commitment to long-term investment to China," Witty told Xinhua.

The anti-corruption probe against GSK, together with anti-monopoly investigations against Microsoft, Jaguar Land Rover, and Qualcomm, stirred unease among foreign firms who perceived unfair treatment and a worsening investment environment.

However, Chinese authorities repeatedly said that the anti-monopoly and anti-corruption probes will bring a fairer, non-discriminatory business environment to help pave the way for further opening-up.

"I think the big message for also many others in China is that China changes all the time, and it's really important to keep listening to the voice of China," said Witty. "We have to understand the regulations, we have to abide by the regulations,"

Chen Fengying, a research fellow with the China Institutes of Contemporary International Relations, said the market economy is essentially an economy under rule of law.

"To ensure the market's decisive role in allocating resources, the Chinese government should adopt a zero-tolerance policy toward corruption," said Chen.

Economists also believe the anti-graft fight could benefit foreign companies operating in China as it will improve business practices.

"Anti-corruption helps the economy in the long run, as it reduces business costs," said Chang Jian, chief China economist with Barclays Plc in Hong Kong. "Just like corporate restructuring, it brings short-term effects but has benefits in the future."