GSK Case Study: Bribery in China

This case study examines GlaxoSmithKline's (GSK) bribery scandal in China, where the company was accused of offering bribes to doctors and hospitals to prescribe their medications. The study explores the corrupt environment created by GSK, the challenges faced by foreign companies in China, and GSK's response to the allegations. It also discusses the current performance of GSK, the limited opportunities for multinational companies in China, and provides advice to CEOs planning to enter the Chinese market. The case study emphasizes the importance of ethical and legal practices in international business and highlights the lessons learned from GSK's experience, including the need to understand local laws, regulations, and cultural norms.

Running Head: GSK
GSK Case Study

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Introduction
In this present paper, we will discuss case study, namely, GlaxoSmithKline which is also known
as GSK. It's headquarter is located in the Brentford, London. The company was established in
the 2000's. The merger had taken place between the two companies, namely, Glaxo Wellcome
plc and Smith Kline Beecham plc. The company mainly deals with vaccination, biology and the
health care of consumer. The mission of company is “to do better”, “to feel better” and “live
longer”. The case is related to the bribe which is given by the GSK to the hospitals in China in
order to prescribe their medicine only. The GSK stated by the authorities of the Chinese
regarding bribery in the July 2013.
Corrupted environment created by GSK
As the overview of Case study is done and it is founded that the GSK was blamed for the
creation of corrupt environment in the China in 2013. The GSK offered three billion Yuan as
bribery to the doctor and hospital. So that doctors will prescribe more drugs of their company
only. It was detained by the Chinese authorities and has alleged that they had offered money to
the doctors or that they have created the corrupt environment in China. It is the third largest
company in terms of creating the revenues. So in order to increase their revenues and to expand
their market share the company decided to take this step. The Company can be solely blamed for
this scandal that had happened. They also received the kickbacks from local agency that deals in
traveling to arrange the conference. The authorities have also found that the bribery was core
activity of the company. In order to boost the share prices and sale so the company was forced to
choose this path. There was serious violation and this case was one of the high-profile cases of

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the China. So bribery is one of unethical and illegal practices that have been considered
something wrong around the globe.
Foreign Companies are targeted easily in China
Local companies that are operating in China or which belong basically to China have the deeper
knowledge of rules and laws that are incorporating in China. So, local companies are also aware
about the basic norms which are required to be followed. But it was founded from past records
that there was much corruption when foreign companies entered into the boundaries of china.
Authorities also say that foreign companies are not aware of laws and regulation of the countries.
That’s why there is more demand of local companies. The local companies in China have also
gained trust of its authorities. China was found in middle of growing anti-corruption program.
The cases of corruption were really less when there were no foreign companies.( Margiotta-
Casaluci et al . ,2013) But as soon as the foreign countries came to the China level of corruption
cases have increased a lot. That’s why local companies are not targeted easily as compared to
foreign countries.
GSK Response towards Allegation
The GSK belief was that there response towards allegation was very professional and even they
are cooperating really well for this. The GSK says that it is allegation on their company. The
China has raised a question over their behavior. The Chinese authorities quoted that this type of
the behavior is considered to be fraudulent. So the GSK executives are deeply hurt by the
behavior of China authority. The GSK people say that they are too much into their work and they
are deeply concerned with all these affairs. They are deeply disappointed by the allegation of the
China Authorities ( Arshad et al . ,2016). They say this type of behavior is clear instance of

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breach of their system, the procedure that is related to governance, values and standard as well.
They also stated that this matter will be taken very seriously and co-operating with the
authorities of China fully. They also said they have zero-tolerance for any of behavior. The way
they have responded to allegation is truly professional because they have covered so many terms
and conditions in their statement that gives us a clear which shows that the response was in a
professional manner.
Current performance of GSK & future perspective
According to the reports the corruption cases are moving from the China and this is happening
because of anti-corruption laws that are formed by government of the China. Especially they are
moving corruption from health care. This also has being found that GSK is really doing well
these days Although there was certain allegation which was put on the performance of company
It also hampers growth of the company. According to the GSK executive there are various
growth opportunities in the China. It provides golden opportunity to the company which will
help to expand their market share. It will also help to increase their share price. So the company
sees good growth opportunity in country like China. The current investigation says that quality
of the GSK is appropriate with the quality benchmark of the company. GSK has rushed into
China market because there are various opportunities in the market which enable to maximize
the profitability of the company. It has been founded that the market has grown 2% according to
current investigation.
China Provides Less opportunity for Multinational Companies
The china is becoming less hospitable for multinational companies there are various entry
barriers into the Chinese market which acts as a barrier to entry for multinational companies. As

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the MNCs entered into China the corruption has started on large scale. The corruption has spread
very vastly. The corruption has occupied too many areas including technology, medicine,
healthcare and the automobile. This has been affecting name of the company to very large extent.
Now foreign companies in China need to be very careful because of international laws that are
related to Foreign Corrupt Practices Act. This act is still very extensive and active too. (Crowe,
E., Pandeya et al ., 2014).The China government says that it is very less hospitalized for foreign
countries, not because of the corruption but there are several factors. Those factors are security
issues, the general security, and the health care. They also found difficulty in coping with the
political issues also. The foreign countries or the MNCs need to be very smart if they want to
operate in the China. They should also aware of the laws and regulation that are prevailing in the
country.
Advice to CEO who is planning to switch to China
There are few facts that help to determine whether it is good option to move to China. The China
is place where there is more pain and less gain for the multinational companies. The profit of
MNCs is flagging day-by-day and the cost is increasing. So the CEO of multinational company
should be clear with the rules and the regulation of China. By considering the GSK’s experience
it is advised that the CEO of the multinational company should critically analyze the business
plan, resources, laws and regulations because the authorities and the government of China have
made life of MNCs and foreign countries really difficult (Gleeson et al., 2013). This is due to the
limited market access in China. Doing business in China as MNCs is really crucial because
higher authorities of China have restricted so many areas for MNCs. (Le Noury et al., 2016). The
competition is also very high. The battle of earning high profit is also very difficult. So CEO of
the multinational company needs to think once more about moving to the China. The company

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should have its competitive advantage in order to develop the brand image in the eyes of the
customers as there are large number of competitors which impacts on the company’s survival
within the specific period of time.
Laws And Regulation Necessary to operate internationally
The company should be aware of culture of the country in which it is planning to operate. The
culture plays a vital role when the MNCs operate in other countries. The environmental factors
are other most important factors that need to be taken into account in order to operate
internationally. The MNCs also sees market opening measures. They also need to analyze
economy of country whether it is slow or restructuring through conducting the economic analysis
of the country (Kane et al., 2013). They also need to determine that laws and regulation in the
operating country. They also need to fix few segments that are what the growth rate is in that
country, what is the social pressure, what is the market risk, what is target market that they need
to target and what are the government norms and regulations.( Priya et al., 2013). It will help
them to grow further. It will also help in expanding market share. It will also help in generating
high revenue which helps to improve the market share of the company.
Lesson Learned & conclusion
In nutshell, GSK is one of the individual case studies. This case is all about agreement that is
done between the GSK and hospital of China. They offered huge bribery to doctors and hospital
of the China. They did this so that doctors of China can suggest their medicines and drugs so that
they can expand their market and also increase their revenue. (PalgrBussel et al ., 2016)At the
end, this has been notifying to the China Authority and strict actions were taken regarding this.
This case was made one of high profile cases. This case helped us to learn lesson that corruption

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while operating globally is still the biggest crime and one shouldn't do this because it hampers
name of the company.( Ismail et al . , 2016) It also spoils brand image of company. The company
also needs to understand the meaning of working under legal system. One must learn lesson that
they should operate ethically while dealing internationally. The company needs not to violate
laws and rules of country. The country needs to analyze importance of dealing ethically and
legally. (Zamek-Gliszczynski et al . , 2013)The bribery case is limited to nations but they are not
expected in dealing internationally. I also learned lesson that government of China has made the
life of MNCs and the foreign countries really difficult. The first thing the company need to
analysis is while operating in China that whether they have made payment to travel agency or
not. They should also determine implication of the risk on our company.
Seeing GSK case study we have learned that how GSK professionally respond to allegation and
is doing really well.

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