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Stanford Business magazine

 

Letter to the Editor

An Added Risk to Business in China

When we saw the August issue cover article, “Probing the Realities of Business in China,” we were surprised that there was no mention of an alumnus who has faced the harshest “reality” for the past nine years as a result of running a thriving U.S. medical equipment import business co-located in Shanghai and San Francisco. Our friend and classmate, Jude Shao, MBA ’93, might have added his advice to that of the other alums if he were not serving a 16-year prison sentence in Shanghai.

As Professor Glenn Carroll noted during the faculty study trip, China’s political economy is intimately entangled with China’s brand of capitalism. But China’s lack of legal infrastructure extends far beyond the shaky intellectual property rights protection mentioned by Sequoia Capital China founder and fellow alum Fan Zhang, and can actually result in criminal charges for business behavior that in the United States is considered ethical. Jude ran afoul of local government officials who solicited him for a bribe to stop a “special tax audit.” When Jude refused to pay the illegal bribe, he was arrested “to teach him a lesson” and held incommunicado in a local jail for 24 months. Later, without the chance to review the evidence against him, he was convicted of tax evasion in the Chinese courts.

Lest you think this is an isolated case, the Dui Hua Foundation counts over 40 American citizens in Chinese prisons or detentions for so-called “economic crimes.” Most are ethnic Chinese who speak the language and understand the culture, but these advantages, the benefit of American citizenship, and lack of wrongdoing are often not sufficient protection in a country without legal transparency and with ingrained local government corruption. Doing business in China offers many opportunities, but there are also serious risks that were not mentioned in your coverage, particularly to entrepreneurs without deep pockets.

Americans behind Chinese bars also languish despite the best advocacy available. For example, while members of Congress, the State Department, and even President Bush have pressed the Chinese government for Jude’s release during the past nine years, he remains in prison.

For more information on Jude’s case including the latest media coverage, and to learn how to help, please go to www.freejudeshao.com.

The Free Jude Shao Campaign
Chuck Hoover, Cyn Dai, Caroline Pappajohn, Lang Ang Pham, and Mark Williams, all MBA ’93