Why Having Chinese Bigwigs at Your Hotel Might Be Bad for Business

Chinese local officials frequently dine in restaurants with the expectation that public funding will cover their expenses.
Why Having Chinese Bigwigs at Your Hotel Might Be Bad for Business
A chef slices Peking duck for diners at the Quanjude restaurant in Beijing on July 24, 2014. Chinese local officials frequently dine in restaurants with the expectation that public funding will cover their expenses. Greg Baker/AFP/Getty Images
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Ms. Shi Yuying ran a hotel in central China for over a decade until it went bankrupt in 2008. Business was bad, but not in the way one might expect.

According to state-run media reports, government officials had made a habit of dining at Shi’s establishment and putting the expenses on public credit rather than paying the bill. The hotel, located in the city of Kaifeng in Henan Province, was eventually forced out of business as the debts piled up and went unpaid.

Despite her receipts and seven years of appealing to the authorities, Shi has not been compensated. Her case went unnoticed until it was covered by local television in Henan.

“I even considered death,” Shi told reporters. “After over ten years of hard work, I didn’t expect that all I would earn in exchange was a pile of IOUs.”

After closing her hotel, Shi began to appeal to government departments in vain attempts to collect over 1.2 million yuan ($200,000) in unpaid restaurant bills. Each receipt bore official stamps from a variety of agencies, such as the police, family planning bureau, and county government offices.