Impact of China's Rio Tinto ruling on biz

A policeman steps out of the courthouse at the Shanghai No.1 Intermediate People's Court in Shanghai during the conviction of four employees of mining giant Rio Tinto.

TEXT OF STORY

KAI RYSSDAL: In Shanghai, China, today, a major corporate corruption case came to an end. Four executives at the British-Australian mining conglomerate Rio Tinto were sentenced to up to 14 years in prison. The four, one of whom we should say is an Australian citizen, were charged with accepting bribes and stealing commercial secrets. The company called that "deplorable." They fired the lot of 'em.

Marketplace's Amy Scott has more now on what the ruling might mean for other foreign firms doing business in China.


Amy Scott: In the 1980s and 90s, China rolled out the welcome mat for foreign companies. As the country built a new economy, Chinese officials wanted their knowledge and money. But analysts say the harsh sentences handed out to the four Rio Tinto executives show times have changed.

Ted Fishman wrote the book "China, Inc." He says the ruling could make it harder for foreign companies to do business in a country where corruption is outlawed, but widespread.

Ted Fishman: If you abide by the rules, you'll be at a disadvantage, and if you break the rules, you'll always be open for legal action when the Chinese find it advantageous to move against you.

Fishman says, because the court proceedings were so murky, it's hard to know exactly what the executives did.

Rio Tinto quickly distanced itself from its employees. The company said any wrongdoing was done outside its systems. China is the company's biggest customer.

John Delury is with the Asia Society's Center on U.S.-China Relations. He says all this could make employees nervous. And, he says, they can't rely on getting a fair shake in the courts.

John Delury: The combination of these things would give pause, I think, to employees of multinationals, who are trying to navigate that kind of environment.

Delury says that could make it harder to recruit in China. But with the Chinese economy booming, he says brave souls will continue to jump in. They may just do so with a little more caution.

In New York, I'm Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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