Gigabyte Loses $5 Million in Fraud
April 27, 2007 1:57 PM
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Regional manager sets up bank loan without company permission
Gigabyte recently made shocking headlines when it announced that it would be
leaving the partnership it had created with long time rival ASUS
. Originally, the plan was to create a joint venture, where the two companies could cooperate on developing and manufacturing new products. Called Gigabyte United, the joint venture would have allowed both companies to share and take advantage of the other's resources.
This week, Gigabyte announced that it had
lost roughly $5 million USD due to an internal scandal
committed by one of its regional managers. Chang Chaosong, factory manager at Ningbo Gigabyte Technology in China, allegedly listed Gigabyte as a guarantor for a bank loan towards a third party loan. By being a guarantor, Gigabyte would be liable to repay the loan if the third party did not repay it.
Unfortunately for Gigabyte, the company or person in question that borrowed the money from the bank did not repay the borrowed money, and Gigabyte was held accountable for the loss. What shocked company officials however, was the fact that Chang did not request company permission before setting up the transaction.
Gigabyte is currently investigating Chang's actions and where and why the transaction was setup in the first place. Chang is no longer with Gigabyte.
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RE: Regional Manager???
4/27/2007 6:36:29 PM
China's banking and finance system is not nearly as developed as ours is. Right now, Chinese banks are fairly awash in cash and are dying to give money away any way they can. Add to that a well dressed, wealthy official who knows someone important at the institution, and he can probably get whatever he wants.
In China, deals are based much more on who you know than what exactly you are proposing. If you are not a foreigner and deliver a well polished proposal that seems to make sense and you give the proper kick-backs, you can pretty much get whatever you want.
In fact, the better you know the person you are dealing with, the more they will feel obliged to accept your proposal since rejecting you is seen as dishonoring and showing disrespect. Chinese culture, much like a lot of Asian cultures, teaches that this is to be avoided at all costs.
In almost every case, such teaching leads to a wonderful society which I really envy and have learned a lot from. It can make for bad business though. It's the same trait that led to the Japanese economic collapse of a few years ago. One of the things I've seen a lot of over the last few years is how much more willing Japanese businesses are to tell each other "no" without fearing they would offend someone.
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