September 17, 2015

Kevin Jones On Building a Culture of Compliance in China

Foreign businesses operating in China must be sure to abide by both regulations under the Foreign Corrupt Practices Act (FCPA) and Chinese laws, which the government has recently been more apt to enforce. In a Duxes Anti-Corruption Report piece, Kevin Jones, Faegre Baker Daniels partner and leader of the firm's labor and employment practice in China, gave advice for businesses trying to cultivate a culture of compliance in China.

"You really have to make an effort to get employees and managers to understand the importance of following the company's compliance policy because of the way business is typically conducted in China," Jones said, adding that regulatory compliance must be an integral part of daily business operations, not a separate initiative.

Jones also said that managers should be sensitive to the fact that compliance with regulations can infringe on Chinese business customs—such as the act of gift-giving, which can be construed as bribery—and can hurt business performance.

"For example, if you're a pharmaceutical company selling into hospitals, the only way you [could] successfully do that in the past is [to] pay the doctors to buy the drugs," Jones said. "Management needs to set reasonable expectations in such an environment and perhaps change the way employees are incentivized to balance meeting sales targets with compliance.”

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