For arguments' sake, let us assume that the business environment in China is poor - and it indeed prompted GSK to breach the country's laws. But what about the markets in the United States and New Zealand, where too GSK was found guilty of felony? A New Zealand court imposed a heavy fine on GSK in 2007 for issuing misleading advertisements. And in July 2012, GSK agreed to plead guilty and pay $3 billion to resolve a criminal and civil liability case in the US, which involved the illegal marketing of certain prescription drugs and its failure to publicize safety data.

GSK, however, is not the first (nor will be the last) pharmaceutical company to be fined for corrupt practices in the US. In December 2012, US drugmaker Eli Lilly and Co agreed to pay $29 million to settle civil charges against its subsidiaries, which were charged with bribing foreign government officials or third parties to win business in Russia, Brazil, China and Poland.

Over the past decade, US courts have imposed heavy fine on quite a few pharmaceutical companies. For example, Schering-Plough, Pfizer, and Johnson & Johnson have paid $500 million, $2.3 billion and $1.1 billion as fine for violating American laws - and the amounts speak volumes of the severity of their crimes. So is the business environment in the US fertile ground for corruption?

The allegation by some foreign media outlets that the investment environment in China is "steadily worsening" because foreign companies have become "easy targets" of official crackdowns is baseless. Of course, the authorities have launched an investigation into infant formula makers and imposed record fine on six of them, including Mead Johnson, Abbott and Friesland, for price fixing.

But there is no truth to the allegation that China is cracking down on foreign companies to deflect public anger at the country's own food and drug safety scandals, and to bolster domestic brands. Five years ago, Sanlu Group, then the largest dairy product maker, had to wind up operations after its melamine-contaminated milk powder claimed the lives of six infants and left tens of thousands of others ill.

China's crackdown on malpractices is a warning to both foreign and domestic companies. And instead of deteriorating the investment environment in China, the crackdown is heralding in a fairer market order and an ever-improving investment climate for foreign businesses.

The author is a professor at the School of International Trade and Economics, University of International Business and Economics, Beijing.

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