I've already talked a little about the inherent disadvantages that US and other developed market economy based companies face due to the Foreign Corrupt Practices Act (FCPA). Companies that can't or won't bribe officials in corrupt economies will be at a large disadvantage compared to companies who will make these bribes. In order to win business they will have to be orders of magnitudes more efficient than their local competitors - which is an advantage that is hard to sustain for long periods of time.
I thought companies had an easy way around it - hire locally connected employees. The relationships these employees have are likely to be based on favors rather than explicit bribes. Hiring these connected people will open doors and prevent the developed market based companies from being shut out of deals or from being taken advantage of. A new story concerning JP Morgan in China highlights how this strategy is becoming a risk for the banks.
...with the U.S. Securities and Exchange Commission (SEC) investigating whether JPMorgan's Hong Kong office hired the children of China's state-owned company executives with the express purpose of winning underwriting business and other contracts...
The facts of the case aren't out yet. It might be the case that people within the relevant JP Morgan departments weren't careful enough to keep incriminating facts out of email and an angry employee became a whistleblower. But if the SEC is merely applying the same criteria to enforcing the FCPA as they do to insider trading (if the correlations look like insider trading they will go after you) companies will have a more difficult time working in emerging markets.
If developed market companies can expect a harder time competing in developing markets this is good news in the long run for developing market equities. Considering the underperformance of EM equities this year they need all of the help they can get.