China: China's New Rules On Donations To Healthcare Entities - Implications For Multinational Companies

Last Updated: 6 January 2016
Article by Todd Liao

In August 2015, the PRC Health and Family Planning Commission (the "NHFPC"), the agency responsible for regulating the Chinese healthcare industry, issued the Administrative Measures on the Acceptance of Public Welfare Donations of Healthcare and Family Planning Entities (Trial Version) (the "2015 Donation Measures"). The 2015 Donation Measures took effect on October 20, 2015 and replace the predecessor regulation -  Provisional Measures on Receiving Social Donations and Sponsorships by Healthcare Entities, which had been issued by the Ministry of Health prior to its merger creating the NHFPC  (the "2007 Donation Measures").  The 2015 Donation Measures are directed at Chinese healthcare entities, such as public hospitals, universities, healthcare professionals, medical associations, etc. ("Healthcare Entities"), not multinational companies, but by outlining the circumstances in which Healthcare Entities may accept donations, these measures should provide greater clarify to multinational companies in determining how to structure compliance programs regarding donations to Healthcare Entities.
In recent years, sponsorships and donations to Healthcare Entities have been the focus of multiple anti-corruption enforcement actions in China.  While such activities are widespread and even expected in China's healthcare industry, they have nonetheless become high-risk activity for multinational companies in light of increased enforcement of anti-bribery laws both domestically in China and internationally.  China's healthcare industry is dominated by state-owned enterprises, with the result that many Healthcare Entities qualify as public officials or institutions for purposes of anti-bribery laws. As a result, interactions with Healthcare Entities in China have become a focus of anti-corruption proceedings, both by Chinese authorities, as in the case of GSK, and by foreign authorities, as in the U.S. SEC's enforcement action against Bruker Corporation.  Such enforcements have been driven in part by the ambiguity of Chinese regulations regarding donations to Healthcare Entities.  The 2007 Donation Measures provided little clarity or transparency to such donations, which made it difficult in turn for multinational companies to implement effective compliance programs. 

In this light, the 2015 Donation Measures are a welcome development.  They offer more specificity and guidance on what donations to Healthcare Entities are considered permissible by the NHFPC.    Specifically, the 2015 Donation Measures (i) extend the scope of healthcare entities for whom donations are regulated; (ii) adds further restrictions and permissible purposes for accepting the donations; (iii) clarifies internal procedures for Healthcare Entities in accepting donations; and (iv) requires greater transparency in Healthcare Entities using and reporting donations.  These regulations will assist multinational companies in designing effective compliance programs for interactions with Healthcare Entities in China, and compliance with the 2015 Donation Measures could also provide a defense for many foreign anti-bribery laws, such as the U.S. FCPA or U.K. Bribery Act. 

Healthcare Entities

The 2015 Donation Measures apply to the "healthcare and family planning entities" (the "Healthcare Entities") in China.  Specifically, the scope includes both not-for-profit public institutions (such as hospitals, universities or scientific research institutes), and "social organizations for public good," which includes medical associations, public welfare foundations, charitable associations and other civil organizations, all of which are supervised by the NHFPC.  The 2015 Donation Measures significantly extends the scope of subject entities compared to the 2007 Donation Measures, which had a far narrower scope generally interpreted to be limited to public hospitals.  As such, the 2015 Donation Measures provide greater clarity on interactions with the many varieties of public entities in China's healthcare industry.

Requirements for Donations

The 2015 Donation Measures define the term "donation" as "support and assistance in the form of funds, goods, etc. provided to healthcare entities voluntarily and not for return." This definition most clearly includes charitable donations and other common forms of sponsorship provided to healthcare institutions, such as sponsorships for speaking events, clinical studies, and symposiums. However, business arrangements with healthcare institutions where consideration is exchanged between the parties are not included in the scope of the 2015 Donation Measures, which would likely include exhibition booths, satellite symposiums, and clinical study results.  However, the types of activities covered will depend on the details of underlying arrangements, and whether the provisions to healthcare institutions are "voluntary" and with nothing received in return.

The 2015 Donation Measures require that a donation be for the purpose of carrying out activities that benefit the public, which is defined as one of the following types of activities: (i) reducing expenses for medical treatment of impoverished patients, (ii) healthcare education of the public, (iii) training of healthcare professionals, (iv) academic activities in the healthcare area, (v) scientific research in the healthcare area, (vi) infrastructure and equipment of healthcare entities, and (vii) other not-for-profit public welfare activities in the healthcare area.

Conversely, the 2015 Donation Measures prohibit Healthcare Entities from accepting the following types of donations: (i) donations that violate Chinese laws and regulations, (ii) donations that involve for-profit commercial activities, (iii) donations intended as commercial bribery or that raise concerns of unfair competition; (iv) donations associated with the procurement of goods or services by Healthcare Entities, (v) donations where the donor has incidental rights to the economic interests, scientific research, industry data, or intellectual property rights related to the donation, (vi) donations where the donated products do not meet the national standards in terms of quality, environmental protection, etc., (vii) donations that carry political or ideological purposes, (viii) donations that harm the public interests and infringes other citizens' legitimate rights and interests, (ix) donations that amount to extortion from the donor, and (x) any donations that could create a conflict of interest with an institution that supervises or enforces government decisions.  Among the above-mentioned prohibitions, items (v) and (vii) were newly added, the remaining items are a restatement of preexisting prohibitions in the 2007 Donation Measures.

New Procedures for Public Healthcare Entities and Donations

The 2015 Donation Measures clarify and revise the procedures that Healthcare Entities must follow before accepting donations.  The 2015 Donation Measures require that Healthcare entities create a "Donation Management Department," and all donations must be processed centrally through such departments.   The Donation Management Departments should also decide whether and how any donations will be used by Healthcare entities.  The 2015 Donation Measures prohibit other departments of healthcare entities, or individual functionaries, from accepting donations directly.  While donors are permitted to designate a general use for a donation (i.e., training of healthcare professionals, academic research, etc.), donors cannot designate individual recipients.  Instead, Healthcare Entities are required to organize a meeting of employees and management to determine the recipients of donations. 

The 2015 Donation Measures also require that Healthcare Entities establish a pre-acceptance evaluation and due diligence procedures for potential donations, which will be carried out by Donation Management Departments.  This would essentially establish a process that mirrors the due diligence procedures of many multinationals in their compliance programs, but with a public entity conducting such due diligence on the private party proposing a donation.  The evaluation criteria in the 2015 Donation Measures for such due diligence largely reflects evaluation of the prohibitions outlined above, including an evaluation of (i) the necessity and feasibility of the donation, and (ii)  the background of the donor and the business relationship between the donor and donee. Healthcare Entities may also involve third parties and regulators in the due diligence process.  It would be advisable that multinationals ensure that their own internal compliance programs and due diligence procedures regarding donations to public Healthcare Entities at least account for the new requirements in the 2015 Donation Measures.
The 2015 Donation Measures also require that donations to Healthcare Entities be made in accordance with a written agreement, which must specify:  (i) the identity of the donor, (ii) the type, quantity, quality, and value of the donation, (iii) a declaration that the funds or property are from "legitimate sources", (iii) the designated purpose for the use of the donation, including any related budget proposals or project plans, (iv) the management requirement for the donated funds or goods, (v) the timeline, location, and method for the implementation of the donation, (vi) the rights and obligations of the two parties, (vii) dispute resolution mechanisms, and (viii)  liability for any breach.  Of note, the 2015 Donation Measures do not define the meaning of the term "legitimate sources", though similar terms in other laws are often interpreted as meaning that that the funds or goods to be donated are legally owned by the donor and can be disposed of by the donor without restrictions.

Regarding the method of donations, the 2015 Donation Measures provide that, "in principle", cash donations must be made via wire transfer and that such transfer be made directly to the bank account of the Healthcare Entity, not to the bank account of individual functionaries of a Healthcare Entity. When assets or property (e.g. medicines or devices) are donated, the value of such assets should be appropriately evaluated with fair market value, as confirmed by notarization in the donation agreement.  The 2015 Donation Measures "encourage" the use of outside agencies to determine and attest to the fair market value of donated assets.  In addition, the recipient Healthcare Entities are required to issue formal receipts (the "fapiao for donation for public welfare") to the donor.
The 2007 Donation Measures had only very basic procedural requirements for Healthcare Entities, and the new procedures outlined in the 2015 Donation Measures seek to ensure greater transparency and process in Healthcare Entities accepting donations.  

Disclosures and Audits

The 2015 Donation Measures contain a new section on disclosure requirements. Healthcare Entities must now publish annual reports on donations accepted by them on March 31 of each year, with such disclosures detailing (i) the amounts/types of donations accepted, (ii) the identity of donors, (iii) the use of such donations, (iv) the Healthcare Entity's procedures for reviewing donations, and (v) contact information for the Healthcare Entity's Donation Management Department.  The 2015 Donation Measures also require that Healthcare Entities answer any public inquiries regarding donations.  These requirements represent a significant shift from the 2007 Donation Measures, which had little disclosure requirements and generally resulted in information on donations remaining confidential and inaccessible to the public, with the result that multinationals also had little sense of common market practice in donations.  This information will now be subject to greater public scrutiny, and may also raise attention of authorities under anti-bribery laws.  Conversely, multinationals will also have access to additional information to get a sense of common/acceptable market practice in making donations to Healthcare Entities. 

In a related vein, the 2015 Donation Measures also require that Healthcare Entities perform periodic audits of donated funds and include information regarding the use of such funds in their annual financial reports to regulatory authorities.  What's more, the New Measures require Healthcare Entities, upon the completion of a donation project, to provide feedback to the donor company on how they managed and used the donation.

Enforcement Considerations

The NFHPC regulates Healthcare Entities, and as such, the 2015 Donation Measures are directed to and binding on Healthcare Entities, not multinational companies.  The Administrations of Industry and Commerce (the "AIC"), through its local branches, is responsible for enforcement of China's anti-bribery laws, including various forms of commercial bribery prohibited under the PRC Unfair Competition Law.  Because the AIC and NFHPC are considered to have equal authority, it is unclear whether the AIC will follow the 2015 Donation Measures when pursuing enforcement actions against multinational companies.  The AIC has considerable discretion in determining whether donations to Healthcare Entities violate Chinese anti-bribery laws, but it is likely that the NFHPC's 2015 Donation Measures will influence AIC's investigations in future.  

Additionally, the more detailed guidance under the 2015 Donation Measures should help multinationals operating the in China's healthcare industry to design stronger compliance programs regarding donations to Healthcare Entities.  Equipped with knowledge of acceptable donations for Healthcare Entities, multinationals can cater their own internal procedures to reflect such requirements, and multinationals should have increased access to greater information on acceptable donations in future thanks to new disclosure requirements.  The 2015 Donation Measures should also provide a strong defense in any investigation by the AIC.  And for those foreign anti-bribery laws with a defense for local law, such as the U.S. FCPA and U.K. Bribery Act, compliance with the 2015 Donation Measures should also provide multinationals with a strong defense for donations to Healthcare Entities in China being permissible under local law.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
24 Jan 2018, Seminar, San Francisco, United States

Dentons will host our Fourth Annual Courageous Counsel Leadership Institute in January, centered on the theme "Cultivating Innovation."

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions