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Many purchasing managers of state-owned enterprises in China intentionally buy products at higher prices and take a cut from the suppliers. Likewise, SOE sales managers often sell their products at lower prices in exchange for kickbacks after the same products are resold by their associates at going market rates. The unconventional practices of buy high and sell low enrich the SOE managers and their private associates at the expense of SOE's profitability.
AmCham China and the Carnegie-Tsinghua Center for Global Policy team up for this presentation examining the economic implications of the buy high-sell low schemes. Shi Han will explain how the fraudulent practices affect the cost and revenue of state-owned and private companies and the supply and demand in upstream and downstream industries. For international companies selling in or buying from China, dealing with suppliers and customers whose market behavior is the reversal of that in the west is a practical challenge one must confront.
