China and Coca-Cola
It seems that the Chinese government was just getting started when it arrested employees from Rio Tinto this Summer. The newest company in the hot seat is Coca-Cola, which had an ex-employee arrested by the Shanghai police over corruption charges this weekend.
From the New York Times:
Police here have detained a former employee of a Coca-Cola bottling plant, whom they accused of corruption and bribery.
The detention of the employee from the Shanghai Shen-Mei Beverage and Food Company, a bottling plant partly owned by Coca-Cola, was reported over the weekend by China’s state-run news media, which said the employee took about $1.5 million in bribes.
We thought people would have learned to weed things kind of things out themselves by now, especially after four Rio Tinto foreign employees were arrested on similar sounding charges in July, suspiciously following Chinalco’s failed purchase of the Australian mining giant. What do you know, there’s a dead business deal here too: Coca-Cola, which has a large market share and ever growing presence in China, was recently prevented from purchasing Huiyuan, China’s largest juice maker.
The government is adamant about foreign companies playing to China rules: anyone trying to access Facebook, Youtube, and a host of other social networking and blogging sites can vouch for this. Though the arrests satisfy government officials, it makes foreign investors wary, which could in turn be bad for business: there is little incentive to invest in a country if you have to worry about being arbitrarily arrested on vague charges.
It is unclear in whether the employee was Chinese or a foreigner, which could have more international fiasco implications. But what China has made clear is that companies need to start watching out – this is most likely only the beginning of China’s anti-corruption crusade, and if you’re a multinational, it’s high-time to start checking that your employees are spanking clean.