The word “compliance” covers a multitude of sins, from anti-monopoly filing and countering corruption to employment, the environment, trade, taxation and industry-specific regulation. But what are the key factors in designing a successful compliance regime, and making it stick? By Jennifer Howitt
Imagine this: you are a sales manager in the Beijing office of a large company. You hear through the grapevine that a lucrative contract opportunity is coming up. By coincidence, you are a friend of the government official charged with the tender process. If you win this contract, it will more than meet your sales targets for this year. Your friend is known to be partial to a few well-timed “red packet” payments. It is rumoured that companies who have handed him red packets have landed major contracts. What would you do?
Whether you resist the temptation to act improperly may depend on the effectiveness of your company’s compliance programme. But how can a company design and implement an effective compliance regime in China?
Matters of definition
As everyone who operates in China knows, bribery and corruption are commonplace. Building personal connections through the giving of gifts and customer entertainment is part of the way business is done. Zu Ming, a partner at Pinsent Masons in Shanghai, describes a “culture or cognition in Chinese society that deals should bring personal gains; thus bribery, kickbacks and so-called ‘red envelopes’ are regarded by some as normal business practices”.