In context

New report reviews compliance practices in China

December 9, 2013
In context

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 China.

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 reviews
  • 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 call-in numbers 


For more information, please read the USCBC report.

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