Does the prospect of giving or receiving gifts make you uncomfortable? In China, the tradition of gift-giving can be a headache for anyone wishing to stay on good terms with government contacts or business partners, especially in the wake of a sweeping campaign to purge crony capitalism from the Chinese economy. 

But President Xi Jinping’s crackdown on corruption has been an unlikely boon for Shanghai-based entrepreneur Jonathan Pestano. The 34-year-old Australian, who first came to China 13 years ago as a language student, now heads up an e-commerce platform designed to take the graft out of gift-giving.

A huge purple-and-green box worth between 980 and 1,780 yuan ($150 to $273) has been delivered to each of Pestano’s customers through his gift-giving platform “Woowbow” since March. Every box delivered includes up to 15 full-sized shareable snacks and goodies such as gourmet chocolates, baked delicacies, energy bars, and exotic teas.

Customers who register with Pestano’s platform and place an order before the end of each month will have gift packages sent either to their own office or to a client’s. 

Before establishing his own business, Pestano worked for six years at an architecture and design firm in Shanghai, where he spent a lot of time maintaining business relations with government officials. During his time at the firm, Pestano learned how acutely important guanxi, or one’s ability to nurture interpersonal relationships, is for businesses — and particularly for public relations operatives. Just like the saying goes: “The better your guanxi, the better your success.”

The best place to cultivate guanxi, according to Pestano, is at a banquet dinner. For a local official he had not previously met, Pestano would take his guest to a fancy dinner, followed by singing at a karaoke bar, where alcohol would help strengthen the newly forged camaraderie. And that’s all before the guest leaves with a few customary tokens — usually expensive cigarettes and liquor — from the host.

However, genuine goodwill can quickly become a means to bribe government officials or business contacts. Companies and individuals deliberately add throw-ins to the customary gifts in a not-so-subtle effort to bribe or influence the recipient. It is common, for example, for a prepaid card from Starbucks or Godiva to be found in a box of moon cakes “by accident.” 

Corruption is so ubiquitous because it facilitates business deals. According to China’s Gift Industry Research Institute, the annual gift-giving market in China totalled nearly 800 billion yuan before Xi vowed to punish corrupt officials.

Pestano joked: “When Xi Jinping came to power, he promised to crack down on corruption. I’ve been in China for so long that I realized the head leaders didn’t mean what they said. So when [Xi] said that, I didn’t take it seriously.”

But in fact Xi was serious when he started the anti-graft campaign in December 2012. More than three years later, the campaign is still going strong and seems likely to continue to clean up the Communist Party. The Chinese government aims at hunting “tigers” and swatting “flies,” from high-ranking central leaders to low-ranking village officials. Since late 2012 a total of 138,867 officials had been punished for excessively spending government funds, China’s Central Commission for Discipline Inspection announced in December 2015.

Pestano recalled that a lot of his clients had been apprehensive to receive gifts since late 2012. “At the beginning, it was just a few people who refused to accept gifts, but later on, more and more people get ostensibly wary of gift-taking,” he said. “They went from accepting anything to nothing.” 

In March 2015 the luxury brand Prada blamed the corruption crackdown for its first fall in profits in four years — down 28 percent for the year ending January. In addition, sales of moon cakes, most popular around the Mid-Autumn Festival, plummeted by 50 percent in 2014 over the previous year in Wuchuan, a major production center of edible delicacies in south China’s Guangdong province.

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Sebastien Gaudin, founder and CEO of Shanghai-based company The CareVoice, is one of Pestano’s customers. Having worked previously in the field of pharmaceuticals, Gaudin said gifting had always been a sensitive issue, especially after a high-profile GlaxoSmithKline bribery case in China. “I tend to gift my clients to keep relations going,” said Gaudin, “but there is a need for caution.”

To Gaudin, outsourcing gift-giving to a go-between like Woowbow provides a risk-free workaround. He simply inputs a budget, and Pestano’s service prepares the gift package and delivers it to the recipient’s door. The whole process is transparent enough for auditors in case they need to check in the future that it conforms with purchasing rules or business ethics.

Another benefit of the gifting vehicle is that the gift packages are delivered in public and typically shared among all the workers in an office. “I hope my clients will enjoy having an afternoon tea as a group once they receive the snacks,” said a smiling Gaudin.

Pestano said the process is akin to democratizing gift-giving in that it changes the nature of corporate gifting from a private “business to person” transaction — often synonymous with bribery — to a public “business to business” token of goodwill. “It’s like taking the privilege of gifts for a few and sharing it with everybody else — which I would call democratic,” he said.

Xi’s anti-graft measures seek to increase transparency surrounding government spending, which includes business gifts. Pestano believes he has devised a way for companies to maintain business relationships with their clients and keep gifting transparent at the same time.

Today, rather than petering out, the anti-graft campaign seems to be gaining steam, as Xi has called for 2016 to be a year when “nobody dares to be corrupt.” While graft busters are busy, though, the need for petty tokens of crony capitalism will remain.

Businesses in China find themselves caught in a dilemma: They have the need and budget for these symbols of goodwill, yet they aren’t sure what constitutes an appropriate gift these days. Do you care about pleasing government officials or business connections but are too cautious to risk overstepping notoriously vague boundaries? Outsource it!

Pestano expects his clientele to triple this year, and he is firmly of the opinion that the act of giving gifts is not necessarily a bad thing. He said if a gift is strictly for business and is given wisely, then it serves to bolster business relations. “It can be a fun, exciting, and good thing for both the employees and the Chinese economy,” he said. To this optimistic entrepreneur, gifting openly and inclusively means everyone wins.

(Header image: For the Lunar New Year holidays, Chinese usually buy gifts for families, friends, and colleagues, Hangzhou, Jan. 4, 2005.  VCG)