Dangers of doing business in China

16-YEAR SENTENCE PUTS A LIE TO GOVERNMENT'S PRO-BUSINESS MESSAGE

MERCURY NEWS EDITORIAL
July 22, 2003

Talk to any high technology manufacturer in the Valley and they'll tell you that Chinese officials will woo, wheel and deal to bring business to China. And, particularly over the past five years, they've been highly successful.

But the case of Stanford MBA Jude Shao stains the credibility of the Chinese government, including their representatives in America. San Francisco-based Consul General Wang Yungxiang should make it clear to his superiors that imprisoning an American citizen for failing to go along with corrupt business practices puts a lie to the government's pro-business message. For Mr. Wang Yungxiang to do any less would be dishonorable.

As reported by Mercury News staff writer Karl Schoenberger, the violations of basic due process in Shao's detention and trial were so egregious that they should give Americans pause about doing business in China, even in relatively progressive Shanghai.

Shao, a 1993 Stanford MBA graduate, ran a trading company that sold used medical devices from the U.S. to provincial Chinese hospitals. The growth curve looked good. A surprise audit, however, put Shao on a collision course with the Chinese government. Instead of paying the auditors a $60,000 "tax audit bond" - a not very thinly veiled bribe - Shao refused and was railroaded into a 16-year sentence for tax evasion. He claims to have the evidence to beat the trumped-up charges. His repeated attempts to be re-tried have met with silence.

Shao's fate is shared by 30 or so business people in China, most of them ethnic Chinese. As one advocate said, "The same arbitrary abuses of power that are used to stifle poitical dissent can be used for other purposes."

Mr. Wang Yungxiang recently visited with Mercury News editors to offer the Chinese government's perspective on a range of issues. He spoke proudly about the educational system that is churning out thousands of engineers every year who can staff Valley companies that choose to move offshore.

But neither he nor his counterpart in Washington would comment on Shao's plight. That only reinforces the notion that doing business in China has its risks - including towkowing to officials seeking bribes.

The Free Jude Shao website can be found at www.freejudeshao.com. The Chinese Consulate's Administrative office is at (415) 674-2905.