China survey: bribes eat big chunk of developers’ profits

Results of a recent survey strongly suggest China’s real-estate sector is straining under a massive burden of bribery.
 
One hundred and thirty-four property developers from three provincial capitals — Wuhan (Hubei Province), Guangzhou (Guangdong Province), and Nanjing (Jiangsu Province) — participated in the survey, which was run by Zhang Hongxia, an assistant professor at Hubei University of Education.
 
Zhang said the developers admitted at least 20 percent of their potential profits goes to influencing officials with bribes, receptions, and tours.
 
Eighty percent of respondents said they knew of developers who lavished officials with gifts worth more than $320 during festivals, or when the developers needed a favor.
 
The survey results also sketch how corruption balloons as it ascends the government food chain. The developers said bribes to section-head level officials range from $800 to $1,600 per official, while bribes to department-head level officials fall between $3,200 to $4,800 per head. Respondents said approaching a bureau chief or director-level official with anything less than $8,000 would be “embarrassing.”
 
Zhang concluded that the scale of corruption would only expand if the government were to ramp up regulation of land development.

Source: Southern Metropolis Daily (南方都市报)

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Benjamin Kessler is a contributing editor of the FCPA Blog and managing editor of ethiXbase. A version of this post previously appeared in the China Compliance Digest.