BEIJING, July 17 (Reuters) - China must crack down oncommercial bribery by multinational firms, the country's topstate paper said on Wednesday, two days after police accusedBritish drugmaker GlaxoSmithKline of the widespreadbribery of Chinese officials and doctors.
In a commentary, the People's Daily newspaper accused somemultinationals of using their market dominance to exploit gapsin regulatory systems in developing countries.
The article suggests Chinese authorities are not about tostep back from a spate of investigations launched in recentmonths into how foreign companies do business in China, from thesetting of prices to quality controls.
"A crackdown on commercial bribery by multinationals isdeeply significant to safeguarding the order of the marketeconomy and protecting an environment of fair competition," saidthe commentary in the mouthpiece of the ruling Communist Party.
Chinese police on Monday accused GlaxoSmithKline of bribingofficials and doctors to boost sales and raise the price of itsmedicines in China. Police said GSK transferred up to 3 billionyuan ($489 million) to 700 travel agencies and consultanciesover six years to facilitate the bribes.
In response, GSK said it was deeply concerned by thedevelopments, which it called "shameful".
A second commentary in the People's Daily said China must"lift a sharp sword to pierce the improper, even illegal, costsbehind rising drug prices" for which multinationals, such asGSK, were responsible.
The first article said the GSK case was an illustration of"the commercial anti-corruption struggle" in China. Projectbidding and tax systems for multinationals were alsoproblematic, the commentary said, without giving details.
"In recent years, some multinationals have utilized strongmarket and technological advantages, operated throughintermediary agents, and taken advantage of the imperfectregulatory system in developing countries to drill loopholes,"the commentary said.
FOCUS ON FOREIGN FIRMS
Some experts have suggested China may be expanding ananti-corruption drive beyond government ranks and domesticcompanies including state-run entities, focusing now on foreignfirms.
China has targeted foreign firms on multiple fronts in thepast few months, although the probe into GSK is the onlyhigh-profile, publicly known investigation focused on bribery.
European food companies Nestle and Danone said early this month they would cut infant milkformula prices in China after Beijing launched an investigationinto the industry.
Chinese media has been giving the GSK story plenty ofattention.
On Tuesday night, state broadcaster CCTV night aired aninterview with one of four detained Chinese executives from GSK.
Liang Hong, vice president and operations manager of GSK(China) Investment Co Ltd, offered details on how he funnelledmoney through travel agencies by arranging conferences, some ofwhich were never held.
"To have contact with some government departments you needmoney that you cannot normally expense to the company," Liangsaid during the broadcast.
Liang said he paid bribes to officials from the powerfulplanning agency, the National Development and Reform Commission(NDRC), and the Ministry of Labour and Social Security, whichare among those required to get medicines approved or pricesset.
It is rare for state TV to carry such interviews, althoughstate news agency Xinhua had earlier been given access to Liang.
Glaxosmithkline (GSK)
