Compliance in China: A Booming Sector Fuelled by Unexpected American Influence
In this episode, Frank S. Hong explores the regulatory landscape of compliance in China, including how regulatory compliance became so prominent in China today, its US influence, and its future.
Frank Hong
Hear about the fact that regulatory compliance is becoming mainstream, in terms of both corporate clients’ needs and law firms’ service offerings, where “not a day goes by without a conference on regulatory compliance”.
State-owned companies are a major force in the Chinese economy, and governmental control and influence over state-owned entities come in three different forms:
- equity ownership;
- personnel appointment and party disciplines; and
- the directives for establishing regulatory compliance systems within the entities, which have become part of the KPI of the state-owned entities.
Arguably, regulatory compliance is meant to shape organisational and operational activities both within and outside the state-owned entities.
While equity ownership and personnel control have only an indirect impact, regulatory compliance affects the rank and file and day-to-day business operations.
The State-owned Assets Supervision and Administration Commission under the State Council plays a major role in propelling the concept and practice of compliance throughout the state-owned ecosystem. As many private companies conduct business with state-owned enterprises, they become aware of and must adapt to the government-mandated compliance practised by those state-owned entities.
Prototypical examples of regulatory compliance work are also discussed, as are the day-to-day aspects of compliance work, including, for instance, the fact that planning business in today’s environment requires export control and sanctions analysis as a matter of routine.
Other key points under discussion include:
- how the concept and current scope of compliance developed;
- American influence on China’s economic development, and the role of US-trained professionals;
- the importance of controlling the cross-border flow of data, including personal information, in the name of national security and personal privacy; and
- how regulatory compliance work in China is moving beyond the US model.
Longan Law Firm
