Nation of Beancounters

Firms have less control over their employees behaviour than you think

Posted in Culture of Firms by Navin Kumar on February 4, 2012

Via Tyler Cowen:

In China a fapioa [similar to a receipt]– the official receipt used for expense claims has a resale face value of 2 – 10% of face value – leaving one behind in a restaurant or taxi is the equivalent of giving a tip (in a culture where tipping is uncommon) and not requesting one allows the person or establishment to avoid ringing the exchange through a cash register. There are two primary practices around handing out fapioa: the first is that they are printed to the exact value; the second is that the seller takes an equivalent sum from book of fapioa that contains various denominations.

In many smaller establishments the seller is reluctant to hand over fapioa since in essence it becomes declared income and it is common to have to ask twice, especially as a foreigner. But in larger service industry chains where (some) tax is a given and employees feel less loyalty to the bottom line over-paying on fapioa (handing back receipts way in excess of the actual sums purchased) is like handing money back to the customer.

The next excerpt follows this one but I wanted to separate it, since it makes the point that firms have less control over the general culture than you think:

The social norms dictate that the seller should round up – so if the the lowest denominations are 20 RMB (about 2.5 Euro) a customer could get 40 RMB of fapioa for a 25 RMB drink.

As a result of which firms lose money on such transactions, since they have to pay tax on income they didn’t receive. Also file under “The importance of having money in adequate denominations” and “second hand markets in everything”. Rest (not much) here.


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