Chinese SOEs & Corporate Compliance

Since the 18th National Congress of the Communist Party of China, the corporate behavior of Chinese SOEs has received continuous attention. In today’s era, corporate compliance is the general trend internationally. Under the current international mainstream anti-corruption compliance laws, a complete and adequate compliance system can not only help companies identify and prevent compliance risks but can also avoid legal penalties and regulatory risks in the course of business operations, and at the same time improve corporate governance as a “self-management” mechanism.For Chinese SOEs, proactively establishing an effective compliance system can help enterprises prevent, mitigate, and even exempt them from punishment by both domestic criminal and administrative penalties and overseas regulatory agencies when they follow the national “go global” strategy. It is also an effective measure to prevent SOEs from being sanctioned by international financial institutions.Part II of this essay will introduce and comment on China’s corporate governance law; Part III will use a set of cases that Chinese SOEs being sanctioned by the World Bank and cases investigated by the Central Commission for Discipline Inspection (“CCDI”) to analyze deficiencies in Chinese SOEs’ compliance programs. Part IV will provide information regarding establishing a workable compliance system for a Chinese SOE based on discussions with in-house lawyers in SOEs, compliance lawyers, and scholars. Also, this part summarizes the experience of several SOEs that have successfully instituted compliance programs and provides suggestions to Chinese SOEs on improving their corporate governance based on the Chinese corporate environment and overseas compliance experience