The trips, plus educational expenses for a Chinese government employee, were valued in the millions of dollars, federal officials said. At stake were contracts worth at least $2 billion.
Such cases show that China is no longer just the world's factory floor; its size and its push to accelerate domestic spending make it an alluring market in its own right.
'It's risky'
Corruption, though, is a pervasive problem in China. The Communist Party leadership, seeing the lawlessness as a threat to its survival, is cracking down. From 2003 to 2007, officials investigated almost 20,000 commercial bribery cases involving state workers, China's procurator-general reported. The amount involved is about $500 million.
Avery, with $6.3 billion in sales last year, triggered the federal investigation by reporting possible FCPA violations. It said the matter involved a small number of local employees in its reflective-materials business who might have made improper payments and that it could incur fines or other penalties.
Since then, Avery has opened new manufacturing facilities in China, as well as its first stand-alone research center outside the United States -- even as it places a new emphasis on business ethics. The company's Chinese payroll has ballooned to 14,000, about 40% of its global workforce.
But the possible corruption case has proved anything but small. Sales in the reflective-materials unit have plunged. Avery has pushed out at least eight employees and managers. Several other senior staff members have quit in frustration.
Among them was Timothy Li, 58, who resigned as business development director of Avery's reflective and graphics division in Asia, based in Hong Kong. He said he had warned regional bosses about using consultants and other questionable tactics to secure contracts.
"I told them it's risky and I don't like to do these kinds of things," Li said in an interview, his voice rising and his arms clenching his chest.
Avery declined to comment about the Tianjin highway project or specific individuals, noting that personnel matters are confidential and that the investigation is ongoing.
But a company spokesman, Laurence Dwyer, said, "Avery Dennison is committed to conducting its business with honesty and to the highest ethical standards in all our businesses and in every region of the world."
