Policing Procurement in Asia for the Best Part of Two Decades

Background

Effective, efficient procurement is the backbone of multinational success. It maximises the performance of individuals and departments, supporting customers and underpinning operational performance. Critically, it is key to ensuring a business is legally compliant and operating ethically – a value to which all multinational organisations aspire.

For organisations operating in Asia, however, achieving the levels of financial control and probity expected in the US and Europe, has been a problem. Corruption remains a challenge, especially at the grass roots level where the money first exchanges hands, deals are struck, and the procurement chain begins.

With two years of pandemic enforced distance from Asia Pacific (APAC) operations, problems have escalated and few US and European organisations have any confidence in the accuracy of financial information being presented. Without on-the-ground support, companies will continue to lose money and risk reputational damage. QTS Global has spent the last two decades working with multinational organisations and Chinese officials operating on a local level to ensure that procurement is robust, has integrity and provides the very best value goods and services.

Asian Opportunity

Doing business in Asia has become a core component of any international expansion for firms in the US and Europe. As an illustration, when China joined the World Trade Organisation (WTO) in 2001, the Chinese economy has grown at an extraordinary rate and is now the second largest in the world.

During that time, Western businesses have become far more adept in their dealings with Far Eastern companies, gaining understanding of the very different personal and business interactions required to achieve successful relationships. And yet, after more than two years of Covid-19 enforced restrictions and a lack of personal, on-the-ground interaction, there is a growing awareness of the risks created by a lack of direct financial control and financial transparency.

As the International Market Advisor (IMA) confirms, anyone doing business in China is likely to hear of or experience corruption in one form or another. Practices such as facilitation payments, bribes and giving and receiving expensive gifts in order to develop relationships have long been regarded as a part of doing business. The Chinese government is keen to crack down on corruption and penalties can be severe. However, the reality on the ground for many western businesses is that it is incredibly difficult to attain the levels of financial visibility required in their Far Eastern operations without the ability to get access to the people running the business.

Financial and Ethical Implications

The financial toll can be significant. As one large US supermarket recently reported to QTS Global, it has had to part ways with its General Manager due to a lack of financial probity. And while the company had some evidence of corruption, with provisional losses estimated in excess of $10 million, it had no idea how far the problem stretched. The only way to determine the true bottom-line impact was for QTS Global to undertake a complete audit of the IT equipment and service procurement activity over the past X years and check every single purchase to identify areas of corruption, most notably bribery.

For multinational businesses, the risks extend beyond the initial financial impact. Corporate Social Responsibility and good governance are increasingly vital components of any western business’ strategic goals and claims. How can any business be confident in its adherence to anti-slavery legislation or commitments to a more ethical / environmentally driven supply chain without far better transparency of and control over the procurement process?

Without native speakers and without face-to-face access to the people signing off on equipment purchases, these businesses have no control and no authority. They have zero visibility of their local operations – and that is creating a very significant business risk and compromising both bottom line and reputation.

Procurement Excellence

Despite the value of the Chinese economy, many companies have left the market due to the ethical challenges posed. But while ethical issues surrounding freedom of speech have proved impossible to overcome for many US technology companies, including LinkedIn, Twitter and Facebook, corruption is not inevitable within the procurement process.

Western businesses need a partner who fully understands the business culture at a grassroots level. Effective and efficient procurement requires agility and an understanding of the wider organisational goals but also knowledge of how best to operate in each local market.

For almost 20 years, QTS Global has taken a totally ethical approach to procurement both internally and for its clients, ensuring that every purchase of IT equipment is undertaken in a totally transparent manner. Leading the team is Haze He, Vice President of Procurement, who has developed a robust procurement process to ensure all client purchases are above board.

Key to the approach is working closely with both clients and vendors to ensure everyone understands that the entire procurement process is free of corruption.

Haze He explains, “We have a strong network of trusted vendors, all of whom must sign a Non-Disclosure Agreement (NDA) which includes bribery and corruption clauses. Vendor performance is also reviewed every year.”

Close Partnership

QTS Global also works closely with clients to understand their processes and brand preferences. When a client has specified the desired product, QTS Global works directly with the vendors or trusted agents, comparing prices to secure the best deal, prior to purchasing the items in the client’s name to avoid any misunderstanding and avoiding the risk of any bribery.

The finance team, as well as the logistics team, are also involved in the vendor process to further reinforce the probity of the procurement process. This ensures supply chain transparency and provides clients with confidence in the CSR and ethical purchase process.

Haze He confirms the value of partnering with local, Chinese-speaking individuals on the ground to ensure good practice. She says, “Working with local people to handle local procurement ensures far better communication than relying solely on emails. When people can talk directly, we can build trusted relationships that ensure the whole process works more smoothly.”

Conclusion

With Chinese Premier Li Keqiang calling recently for further efforts to combat corruption and build a clean and honest government, the challenges facing any Western business are not insignificant. As Haze He says, “I think all companies need to check internally for this problem.”

But they are also not insurmountable. With the right approach and a commitment to rigorous, honest procurement backed up but robust processes, QTS Global can ensure that every purchase of IT services and equipment across Asia Pacific is honest and that a fair price is paid.

Critically, the entire supply chain is transparent, providing companies in the US and Europe with confidence that ethical business values are being adhered to across the globe.

What is QTS Global All About?

QTS Global is an American IT company based in Asia Pacific for over a decade with a mission to vanquish needless IT suffering wherever our clients operate in APAC.

We serve every imaginable industry including manufacturing, logistics, services (law firms, architecture, consulting), food & beverage, software, gaming, hospitality & leisure and educational institutions.

We’re about providing innovative support models customized and aligned to client requirements at the global level, spanning the entire enterprise.

We’re about locailizing support according to the client’s market requirements and ensuring that local teams are supported wherever they work, and wherever they go.

And we’re about resisting the status quo —rejecting questionable agendas in the name of building valuable, long-term and sustainable relationships with our clients.

The result? QTS Global has helped companies decrease fixed overhead costs by as much as 75% and increase productivity by 100%.

And in the end, that’s what it’s all about.

Let’s Connect!

Patricia Erica Acuña
patricia.acuna@qtsglobal.com

The ability to operate at the level of multinational corporations calls for partners that operate with the same set of core principles to have a smooth and harmonious relationship.

Efficient, interoperable, cost-effective with integrity, QTS Global has been a committed partner.

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