Why
“guanxi” or “corruption” is rampant in the building
industry
The arts of doing
business in the Asian countries have always rely on “guanxi” or
the art of building relationships or connections to do business. This
invariably results in corruption to secure contracts.
“Guanxi”
or connections is an art or wisdom practiced by the Chinese in doing
business. Chinese are good at “guanxi”. It also exists in the
West, in the United States, too. But in Asian countries especially
China and Malaysia it's just deeper. Singapore is no exception as our
leaders also believe in this principle of doing business.
These are the many real
cases in my 30 years in the industry. The reason I publicize the real
cases using 'guanxi' or relations in building industry is to explain
why corruption is no good and is not a win win solution for all
parties including end users.
How did the Chinese
cultivate 'guanxi' or connections to do business. In building
industry, this is how it is practiced.
They do it in the name of
so called “entertainments” such as buying expensive dinners;
sending expensive gifts during festive seasons and “red-packets”
or cash filled envelopes.
The contractors,
suppliers and consultants usually work closely together on good
relational benefits.
How it works. First the
suppliers will work closely with the Architects or Designers and
Quantity Surveyors engaged on the job by the Developers. As Architect
and Designers usually write the specifications for materials used for
the Project.
Suppliers will try to get
into the book of Architects and Designers by building up a good
rapport with them. They usually do it through a scheme called “under
table money” for contracts secured for the project.
The contractors in order
to get selected to tender for the job will too try to get into a good
relationship with the Architect and Designer as they can have a say
in the selection process though many a times the Developer would
decide on the short list of contractors to tender for the project.
It also benefit the
successful contractor to be on good relationship with Architect so
that they can influence the Architect to change specifications or
construct method to cut price and the savings is shared between them.
The tenderer may also
collaborate with the Architect or Designer to make up the tender
price by certain percentage of say 10% to cover them when successful.
So how can we do business
without “guanxi” or corruption
Build a new set of rules
will not work. Make these things more open, transparent, and, in this
way, more free, equal and fair.
I
am an advocate for a win-win solutions among industry players. The
only solution
is to create a new kind of level playing field, where everyone
benefits from an unfair arrangement by exploiting it equally.
Some people are real
masters at corruption, and some aren’t. I hope to create an
awareness so as to help the weak ones advance and take away the cream
from the experts.
In other words: Fight
fire with a smart and balance cost benefits designs, and corruption
with sensible win win solutions where everybody walk away being a
winner instead of current situation where the biggest pie of profit
go to Developers and smaller or nil profit to contractors and
suppliers.
The approach reflects the
chances of curbing corruption, in the absence of independent
monitoring agencies.
Corruption
is growing all the time and had been just part of the system for
decades
and people are growing richer in China and South Asia.
Transparency
or anti-corruption is necessary to stem the fire of rapid
corruption.
If
it wanted to control corruption, the various parties must understand
that it is futile to employ audit professionals or institutional
or countries pressure to suppress it. The various parties should
understand that it is not a win win solution for them and that they
should work
together and want to do it.
Yet, far from fearing
corruption, officials and businessmen “are afraid if you are not
corrupt. They want you to be corrupt. If you don’t join in, if you
want to be a good person, then you highlight their badness.”
The reason I publicize
the real cases using 'guanxi' or relations in building industry is to
explain why corruption is no good and is not a win win solution for
all parties including end users.
Because of government's
involvement, corruption in China is very serious and very rampant but
under control.
Corruption is morally
ugly. It also increases costs.
A society that relies on
guanxi to get things done is a scary place.
When guanxi becomes
stronger than rules, it’s dangerous to everyone. Why? Because if
you use your guanxi, I’ll use my guanxi, and in the end the price
of everything rises. When there are no rules, then everything is a
competition, and those with more power win.
As
China’s economy expands and becomes globalized, I think it’s
going to grow.
Everyone knows that 10
years ago, success was 30 percent guanxi and 70 percent talent.
Today, to succeed, you can reverse the ratio. Seventy percent guanxi
and 30 percent talent will do.”
Had I remained a
bureaucrat, I’d definitely have become corrupt. The reason is
simple, virtually everyone offered bribes.
“You
can resist temptation once but not a hundred or a thousand times.”
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