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William Pesek

Glaxo and the Ugly Side of China Inc.

On the day of Alibaba's triumphant IPO, a murky verdict and huge fine against GlaxoSmithKline in China should give investors pause.
Glaxo isn't alone in its troubles in China.
Glaxo isn't alone in its troubles in China.

On Friday morning, China woke up to news that homegrown e-commerce giant Alibaba had raised $21.8 billion in its initial public offering -- the largest by any company in the U.S. Just as commuters were going home, state-owned media announced that authorities had fined London-based pharmaceutical giant GlaxoSmithKline a record $489 million and given several executives suspended prison sentences for ordering the bribing of doctors and hospitals. These are the two faces of China Inc., and they should give Alibaba's eager new investors pause.

I have no inside knowledge of what Glaxo executives did -- or didn't do -- in China. The London-based company has published an apology, effectively copping to some dodgy dealings. But the company's experience during a long investigation and secret trial underscores how opaque, unpredictable and downright unfair the world of business remains on the mainland. If Jack Ma's Alibaba speaks to the new China -- booming, modern and international -- the Glaxo affair is a sober reminder of the old.