March 29th, 2010
11:30 AM ET

Wake-up call for foreign firms in China

[cnn-photo-caption image=http://i.cdn.turner.com/cnn/2010/BUSINESS/03/21/china.riotinto/story.china.rio.tinto.afp.getty.jpg caption="Rio Tinto, the second largest mining company in the world, offers a 'wake-up call' to businesses operating in China." width=300 height=169]

Peter Humphrey
Special to CNN

While the outcome of the Rio Tinto bribes-for-secrets trial in Shanghai was not in doubt, the lessons from the fiasco for businesses operating in China amount to a loud wake-up call that no company can afford to ignore.

With Australian citizen Stern Hu – Rio Tinto's erstwhile head of iron ore business in China – and three Chinese colleagues reportedly pleading guilty to bribery charges after a brief 3-day trial last week, nobody expected them to get off the hook in the court verdict issued on Monday. Reports of guilty pleas in the Chinese media ahead of the verdict usually augur trial convictions and stiff penalties.

The true details of the case will probably never emerge in full from China's secretive judicial process. But whatever you believe about what Stern Hu did and did not do, it is clear the case is symptomatic of the wider culture of corruption and cash-for-secrets activity that plagues all business across the country.

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