In 2010,we witnessed an increasing number of enforcement actions
taken by the local Administrations for Industry and Commerce
("AIC") in China against sales and promotional activities
undertaken by healthcare companies, alleging commercial bribery.
The enforcement actions were taken by AICs in many cities across
China, and many targeted multinational companies.
These recent AIC initiatives have focused on companies'
interactions with healthcare professionals, especially on speaking
engagements, sponsorships for participation in scientific and
educational activities, and direct or indirect donations to
healthcare institutions. Although these activities may have genuine
scientific or educational purposes and were approved internally
according to companies' compliance policies and the local
industry code of conduct, the AICs in some cases view them quite
differently. Thus, Foreign Corrupt Practices Act ("FCPA")
policies alone will not exempt companies from local enforcement
In 2011, there is no sign that the AICs will decrease these
enforcement efforts. On the contrary, enforcement actions may
become increasingly intensive and aggressive because the AICs are
obtaining more knowledge about the business models adopted by the
multinational companies for the Chinese market.
The Chinese Government is amending the Law for Anti-Unfair
Competition, the legal basis for the AIC enforcement against
commercial bribery. If the amended law does not provide sufficient
clarification on key substantive and procedural issues,AICs may
have even greater power and discretion in the future.
In response to this situation, companies should carefully review
their sales and promotional activities in light of China standards.
Employees should be trained on AIC standards. More importantly,
industry should continue to help the AICs and the Chinese
legislative bodies to understand legitimate scientific and business
activities which are otherwise being disrupted by AIC enforcement
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The requirement to provide home care packages on a consumer directed care basis (CDC) commenced on 1 July 2015.
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