This can result in companies providing clients with expensive trips abroad, lavish meals and red envelopes stuffed with money.

But not all businesses get drawn into this murky world; some say they abide by the same high standards they observe elsewhere.

And one foreign business advisor said firms that supply good products and services will always do well – even if they refuse to be corrupt.

The use of bribery in the business world in China has come into sharp focus because of the trial involving four executives working for the Anglo-Australian mining firm Rio Tinto.

The four were sentenced in Shanghai to between seven and 14 years in prison for taking bribes and stealing commercial secrets.

But how much of a problem is bribery for foreign firms operating in China?

One British businessman, who did not want to be named, said it was a big problem, particularly in China’s smaller cities.

He told the BBC of one occasion when he was trying to set up a joint venture company with a Chinese partner in Shandong province.

Negotiations had been going on for weeks, without any success, he said. Then, at one meeting, he was asked to step outside for a chat with an official.

“He said all the problems could be overcome – so I asked him how. He said it could be done if I gave him 1m yuan ($146,000: £98,000),” said the businessman.

via BBC News – Murky world of corruption in China.

But with the country’s economic rise, the face of the China practice at international firms has grown increasingly … Chinese. Unlike their predecessors — who were mostly white males — New China Hands are largely of Chinese descent. Many, like Gao, left China to study abroad, joined top global firms, and are now heading back to take on leading roles at their firms’ Beijing, Shanghai and Hong Kong offices. They are joined by a new generation of expat lawyers with a far stronger mix of language and legal skills than their predecessors had.

“In five, seven years, there will [probably] be someone from mainland China sitting in this seat talking to you,” says William Barron, the decidedly non-Chinese senior partner in the Hong Kong office of Davis Polk & Wardwell. “And that’s as it should be. The group of Chinese lawyers we have in their 20s and 30s is just outstanding.”

via The New China Hands.

The No. 1 branch of the Shanghai People’s Procuratorate charged the executives Wednesday with bribery and infringing on trade secrets. All four were arrested last year on suspicion of industrial espionage, but no spying charges were brought Wednesday. The executives, led by Australian citizen Stern Hu, were held without being formally charged since July, as Chinese authorities completed their investigation.

Citing court statements, the official Xinhua news agency said prosecutors claim the executives took “advantage of their position to seek profit for others, and asking for, or illegally accepting, huge amounts of money from Chinese steel enterprises.” As such, Xinhua reported, the executives allegedly “lured the Chinese enterprises’ heads with promises, or through other illegal means, to obtain the steel companies’ commercial secrets on multiple occasions, causing “extremely serious consequence[s]” for the companies.”

Rio Tinto is one of China's largest suppliers of iron ore. The basis of the case is the suspicion that the company may have resorted to bribery and acquisition of trade secrets to inflate by billions of dollars the price of ore sold to Chinese companies, many of which are state-owned.

The arrests and the suspected political motivations behind them have caused widespread concern among Western businesses operating in China, “raising fears that other executives could be accused of bribery or arrested because of commercial disputes with Chinese companies,” The New York Times reports.

via China Indicts Rio Tinto Executives.

But not all of Asia is gloating. Missing altogether from Eversheds’ report is the city that’s most worried about losing ground to Shanghai: Hong Kong.

Obviously, such surveys are to be taken with a grain of salt; after all, over a tenth of Eversheds’ respondents predicted Dubai would emerge as the world’s preeminent financial center in decade’s time.

And Hong Kong, a special administrative region of China with a separate local government and legal system, has been booming recently. So far this year, its exchange is leading the world in initial public offerings, mostly on behalf of mainland Chinese companies. It remains the preferred regional base for global banks and, consequently, international law firms.

Still, Hong Kong has long had a complex about Shanghai, which was the region’s preeminent financial center before falling under communist rule in 1949. Now that that same communist government has embraced capitalism, fears abound that Shanghai will be promoted at Hong Kong’s expense.

That anxiety was reflected in a Reuters article last week, in which one Hong Kong banker fretted that his city would become a second city — a Boston or a Chicago to Shanghai’s New York.

via Will Shanghai Overtake Hong Kong as World Financial Center?.

But the deal he hatched in Hong Kong that year — taking out a loan to acquire a publicly traded property development company, then paying back the loan with cash held by the acquired company — proved part of a long pattern of fraud and corruption. Zhou was arrested in Shanghai in 2003 and sentenced the following year to three years for illegally procuring property and loans. In November 2007 he was given another 16 years for bribery and tax fraud.

Here's the real caution flag for firms, though: Lawyers on the deal have now been in prison for over a year.

In September 2008, three Hong Kong lawyers who worked on Zhou's acquisition — Donald Koo and Vivien Fan of Paul, Hastings, Janofksy & Walker's Hong Kong office and Simon Lai of Hong Kong-based Deacons — were sentenced to prison terms ranging from two to almost three years. Their crime: crafting disclosure documents concealing Zhou's plans from investors and regulators.

[continued] Paul Hastings Lawyers Jailed in Hong Kong for American-Style Practices.