King & Wood Mallesons

Asia-Pacific 100 position: 3

What does an effective anti-bribery and corruption programme require?

By Liu Xiangwen, Monique Carroll and Zhu Yuanyuan

Much has been written on bribery and corruption in China, including the differences between criminal bribery and commercial bribery and, of course, the need for an effective compliance programme. However, foreign companies operating in certain complex or sensitive industries in China need to do more than instil an anti-corruption policy. What is needed is an in-depth understanding of the unique legal environment in their industries. This is because in some industries, particular conduct or business models permitted elsewhere may be very sensitive and considered bribery or corruption. It is recommended that companies operating in China adapt their compliance programmes to account for industry-specific regulations and sensitivities and to undertake regular internal compliance audits as a check on the effectiveness of the compliance programme and to ensure that it remains up to date.

There are a number of industries that have unique regulations aimed at preventing bribery and corruption, in addition to China’s general anti-bribery and corruption laws (i.e. the Anti-unfair Competition Law, the Trial Regulations of the State Administration for Industry and Commerce on Prohibition of Commercial Bribery and the Criminal Law).

The pharmaceutical industry is a sensitive industry subject to additional regulations. For example, while China’s general anti-bribery and corruption laws do not prohibit properly recorded price discounts, discounts given to public hospitals in China (e.g. on the purchase of medicines and equipment) will raise bribery and corruption issues. This is partly the result of the medicine and equipment pricing policy in China…

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