Best Practices for Managing Compliance in China
Because of a highly competitive and culturally different operating environment, ensuring
adherence to corporate ethics and compliance policies remains a concern for many US
companies doing business in China. A recent US-China Business Council (USCBC) member
survey on compliance best practices found that 60 percent of interviewed companies were
concerned about competing with companies not following the Foreign Corrupt Practices Act
Underdeveloped rule of law and lack of transparency greatly increase the risk that Chinese
government agencies may solicit companies for benefits or kickbacks.
Compliance training and monitoring techniques such as audits and whistle-blower programs
are critical components of a successful compliance program. Over 90 percent of interviewed
companies incorporate such techniques into their compliance programs.
An increasing number of companies is seeking to incorporate into their existing compliance
programs measures that will minimize liability risks from joint venture (JV) and third-party
Companies tend to run compliance programs and set up local compliance teams in accordance
with regional characteristics, by incorporating tailored training or allowing regional teams to
approve entertainment expenses programs.
US companies vary in the thresholds they set for entertainment expenditures for Chinese
government stakeholders, as well as the methods by which they approve expenditure requests.
The majority of companies interviewed was not optimistic that new Chinese government
compliance efforts would lead to significant improvement in the enforcement of China’s antibribery laws.