In 2011, the economists Hongbin Cai, Hanming Fang and Lixin Colin Xu published a study of the entertainment and travel costs of Chinese firms in the Journal of Law and Economics. On average, these costs amounted to about 3 percent of a firm’s total value added.
The study found the spending to be a mix. It included “grease money to obtain better government services,” “protection money to lower tax rates,” managerial excess, and “normal business expenditures to build relational capital with suppliers and clients.”