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Home > Bribery
Survey result: how is bribery risk managed in China?
By Henry Chen | 2021/2/2 0:28:19

To write the book Bribery Risk Management in China, we did a survey, from March 22 to September 19, 2020, about how bribery risk is managed in China.  There were 400 participants taking part in the survey.  Hereinafter is the result of the survey: 


1. As far as the Chinese mainland market is concerned, which of the following anti-bribery laws do you think is the most stringent?


No. 1 is China’s Criminal Law.  Probably not surprising to many of our readers, No. 2 is the Foreign Corrupt Practices Act of the U.S.  No. 3 is China’s Anti-Unfair Competition Law.  The last two are UK Bribery Act and France’s Sapin II.



Surprisingly to many of western countries’ lawyers, there are two kinds of anti-bribery laws in China: criminal law and administrative law.  The primary legal authority of administrative law is Anti-Unfair Competition Law, about which you may follow the link to read more.


2. As far as the Chinese mainland market is concerned, which of the following laws do you think has the greatest impact?


No. 1 is China’s Criminal Law; 40% of the participants selected it.  No. 2 and No.3 are respectively the Foreign Corrupt Practices Act (accounting for 36%) and China’s Anti-Unfair Competition Law (accounting for 22%).  The remainders are UK Bribery Act and French Sapin II.




3. As far as companies in the Chinese market are concerned, which of the following types of companies do best in anti-bribery risk management?


Seventy six percent of participants selected foreign-invested enterprises; 16% selected State-owned enterprises.  Four percent respectively selected private enterprises and the enterprises of Hongkong, Macao and Taiwan.  However, we do not think the companies from Hong Kong, Taiwan and Macao are the worst cases in bribery risk management.  The reason why they are chosen as worst cases could be that the companies from Hong Kong, Taiwan and Macao taking part in the survey are fewer than the companies from other regions.



4. Has your company conducted anti-bribery training in the past year?


Forty percent selected no.  Twenty nine percent selected once.  Ten percent and 21% of participants respectively selected twice and three times or more.




5. Is the training (if done) done by your company convincing and effective?


Fifty percent selected yes; 50% selected no.



6. Does the company have an anti-bribery whistle-blowing hotline?


Fifty-five percent selected yes; 45% selected no.


7. Among the fraud risks faced by your company, which of the following risks do you think is the most serious?


The frauds in this survey are the fraudulent activities that employees conducted on their employers, which include embezzlement, taking bribes, conflict of interest (employees do business with the company directly or indirectly without telling the company), theft of tangible assets and theft of trade secrets.


Counter-intuitively, Fraud No. 1 is “conflict of interest” other than “taking bribes” or “embezzlement”.  Fraud No. 2 to No. 6 are respectively embezzlement, taking bribes, theft of trade secrets, others and theft of tangible assets.




8. In the past year, how many times did your company experience the above fraud risks?



217 of 400 selected none accounting for 54%

53 of 400 selected once accounting for 13%

22 of 400 selected twice accounting for 6%

32 of 400 selected three times accounting for 8%

9 of 400 selected four times accounting for 2%

17 of 400 selected five times accounting for 17%

2 of 400 selected six times accounting for 1%

0 of 400 selected seven times accounting for 0%

2 of 400 selected eight times accounting for 1%

2 of 400 selected nine times accounting for 1%

44 of 400 selected ten times accounting for 11%


The reason why there is a big percentage (54%) selecting no could be that the risk of fraud is difficult to detect.




9. In the past year, how many times has your company experienced the risk of making bribes?


Third-nine percent selected 10 times or more; 32% selected once.  It is quite surprising that about 40% selected 10 times and the selection of another 1/3 is as low as once.


-16% selected twice

-18% selected three times

-6% selected four times

-14% selected five times

-5% selected six times

-2% selected seven times

-0% selected eight times

-4% selected nine times

-39% selected ten times and more (this number is quite alarming)




10. Does the company conduct anti-bribery due diligence (including due diligence for M&A and on trading partners)?


55% selected yes

45% selected no


_________

The author, Henry Chen, licensed to practice law in China and New York, is a senior partner at the Dentons office in Shanghai. Before joining Dentons, Henry was AP Compliance Director of Ford. Henry's practice areas include FCPA, anti-bribery and fraud investigations, cyber security and data governance, economic sanctions and trade controls, compliance management systems, corporate matters and dispute resolution. You can reach Henry by sending an email to henry.chen@dentons.cn. Henry is the author of the book Risk Management on Commercial Bribery in China and the book Compliance Risks of Enterprises in Globalization: Outbreak and Control.



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