Foreign companies doing business in China are likely to
encounter local cultural conventions that conflict with the legal
and ethical rules under which they are required to operate. A new
report by the U.S. China Business Council
("USCBC") provides insight into the
compliance practices of foreign companies doing business in
This information is available in English only.
The report, entitled "Best Practices for Managing
Compliance in China," is based on a survey of 30 companies
doing business in China in a wide variety of areas.
About 60% of the companies reported in the survey that they are
more concerned with competition from other companies not following
FCPA strictures than with managing their own compliance program
enforcement in China. In USCBC's annual membership survey,
conducted at the same time as the compliance survey, 35% of the
companies indicated a loss of business due to FCPA compliance. For
example, not being selected in a government procurement tender, and
losing to a competing company not bound by the same restrictions.
Nevertheless, none of the companies surveyed questioned the
benefits of compliance. It would even make it easier to define and
defend their government relations practices.
Among other things, the USCBC survey provides insight into:
Structure: About 40% of the companies reported
employing full-time compliance officers at the local level covering
either China or Asia-Pacific
Local adoption: Over 90% of the companies surveyed
reported that compliance policies are developed by their global
teams and then implemented in specific regions. Nearly 60% have
China-specific rules built on global compliance principles
Gifts: Another key issue is gift giving, which is
customary in China. Most companies reported that they discourage
gifts. When they are unavoidable, typically firms favour giving
gifts of minimal monetary value with corporate logos such as flash
drives, calendars, notebooks and small toys directly related to the
business of the company
Training: Survey respondents stressed frequent and
continuous training. Some companies tie training to annual
Auditing: The most common method of monitoring
compliance is through auditing. Approximately 44% of those
responding reported utilising an external firm while 36% augment
existing internal auditing with external firms
Whistleblowers: Nearly all companies surveyed offer
hotlines for staff to anonymously report compliance concerns. The
most successful are those with multilingual support and local
Anyone with standard form contracts who deals with small business must review the contracts for potential unfair terms.
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