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Business Ethics Article

In: Business and Management

Submitted By tibia
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Danone subsidiary Dumex accused of corruption in China
Chinese state television aired a story last week in which Dumex, a Danone subsidiary, is accused of corruption. An anonymous former sales manager of Dumex was cited by CCTV, saying the company is paying medical staff at local hospitals in China, to promote its milk powder products (Jourdan & Laurent, 2013). Danone’s reaction in a statement, issued last week, was that it is “shocked” and that an internal investigation will follow (Jourdan & Laurent #2, 2013).
Foreign brands hold high market shares in this industry, because Chinese parents often do not trust local brands due to a scandal in 2008, when tainted local brand milk powder products killed numerous children and babies (Harrison, 2013).
In the past few weeks the Chinese government has charged numerous probes against corruption, among them various drug companies have been investigated. The healthcare industry seems to be sensitive for corruption, fueled by low wages for doctors and other hospital staff (Jack, 2013).
Dumex, and various of its competitors have recently been accused of price fixing, which is in violation with the Chinese anti-monopoly laws, these accusations eventually lead to price reductions of Dumex’ infant formula products (Astley, 2013).
In the latest allegations, Dumex is accused of paying so called “sponsorship fees” to various ranks of hospital staff. According to the CCTV report hospital staff was demanded to advise Dumex milk powder to new born babies, which would lead them to develop a taste for the product and hence enlarge the market share of Dumex in China (Jourdan & Laurent, 2013).
Besides the fact that the ‘bribing’ of hospital staff is against Chinese law, and hence actions should be taken against it, the allegations have also caused uproar among the Chinese public. Many view the actions of Dumex as

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