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Strengthening Compliance Capacity in China: Collective Action for Risk Mitigation

This workshop explores the challenges and opportunities in promoting collective action to strengthen compliance capacity of Chinese enterprises. It focuses on research, policy recommendations, and training programs aimed at cultivating a culture of compliance. The workshop highlights the need for expertise and support for medium and small-sized enterprises.

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Strengthening Compliance Capacity in China: Collective Action for Risk Mitigation

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  1. Compliance Collective Action in China Yuyang Liu liuyuyang518@163.com SII2 Integrity Partner Peer Learning Workshop Plenary 4: Collective Action in East & South Asia Basel, Switzerland, 27 Apr 2018

  2. Contents I. Academy Introduction II. Collective Action III. Challenges

  3. Academy Introduction • Research domain: • NATC specializes in the research on the global and China strategy of TNCs, corporate governance and culture with a focus on corporate social responsibility. • Business Model: • submits policy recommendations for the Ministry of Commerce and other government agencies. • offers consulting advice to Chinese and foreign TNCs. • Prof. Wang Zhile, Member of UN Global Compact's Working Group on the 10th Principle (2011) 3*

  4. Contents I. Academy Introduction II. Collective Action • III. Challenges

  5. Siemens Integrity Initiative 2nd Funding Round Name: Strengthen Compliance Capacity Building of All Market Participants in China Aim: strengthen compliance capacity of Chinese enterprises and promote collective action in China Funding Period: 36 months/ Oct. 2014 to Sep.2017 Funding Amount: USD: 1,493,932.85

  6. Activities & Outcomes Activity1: Research & Publication • Six steps of establishing compliance system • Compliance risks assessment through investigation • Developing risk-orientated compliance policies • Coordination of compliance related functions and strengthening compliance responsibilities • Enhancing compliance operating measures such as training, compliance performance evaluation, case reporting and investigation • Evaluation of the effectiveness of compliance system • Cultivate compliance culture through persistent effort • based on first-hand experience of enterprises • emphasizes corporate compliance practices

  7. Activity1: Research & Publication 20102012 2014 2015 2016 2017

  8. Activity2:Policy Recommendation Three reports: Reinforcing Compliance Culture: A New Goal for the Reform of State Owned Enterprises Enlightenment Gained from the Compliance Management Practice of American Companies Chinese Enterprises are Faced with Great Compliance Risks: Lessons Learnt from the case of ZTE Submitted to • State-owned Assets Supervision and Administration Commission of the State Council, • Ministry of Commerce, • Office of the Central Leading Group on Financial and Economic Affairs

  9. Activity2:Policy Recommendation March 30, 2016SASAC launched the program-Establishing Compliance System in SOEs, and selected 5 pilot enterprises:China National Petroleum Corporation China Mobile Communications CorporationChina Railway Group Dong Fang Electric CorporationChina Merchants Group Improve the draft of Guidance for all SOEs to establish compliance management system

  10. Activity3: Compliance Club Compliance Training Sep. 23-25,2015,Beijing Mar.23-25,2016,Beijing Jun.15-17,2016,Shenzhen Sep.21-23,2016,Beijing Apr.19-21,2017,Shenzhen Jun.14-16,2017,Beijing Aug.14-16,2017, Beijing

  11. Activity3: Compliance Club Compliance Training BMW Brilliance Dongfang Electric

  12. Activity3: Compliance Club Compliance Forums &Workshops • improve corporate governance and compliance implementation • dialogue between public and private sectors • push collective action

  13. Activity3: Compliance Club • Seminars for target industries Auto industry, with China Association of Automobile Manufacturers Healthcare industry, with Advanced Medical Technology Association petroleum and petrochemical industry, with China Petroleum and Chemical Industry Federation

  14. Activity3: Compliance Club • expert team on corporate compliance

  15. Outcomes • On the 35th conference of the leading group for comprehensive deepening of reform on May 23rd, 2017, President Xi announced that “the construction of compliance system in overseas business operation should be strengthened”. • and "we will strengthen international counter-corruption cooperation so that the Belt and Road will be a road with high ethical standards.” • multiple Chinese departments like SASAC, and provincial departments like Beijing and Shenzhen authorities are enhancing compliance management of enterprises • many industrial associations and institutions jointly push the trend of compliance, such as China Petroleum and Chemical Industry Federation strengthening compliance has gradually developed into the collective action in China

  16. Contents I. Academy Introduction II. Collective Action III. Challenges

  17. Challenges • 1.promote collective action on a larger scale, • further enhance compliance capacity of Chinese enterprises • as China strengthens international cooperation and further opens up while pushing the policy of "One Belt and Road“, a large number of Chinese enterprises are gonging global, and compliance risks have become their core risk • Chinese enterprises still lack expertise to set up compliance plans and address their primary risks • to influence Chinses enterprises of different types, especially the medium and small sized enterprises and enterprises in less developed regions 3*

  18. Platform building • With the support of multiple government departments, NATC has cooperated with China Enterprise Confederation and China Council for the Promotion of International Trade to establish China Enterprise Compliance Promotion Alliance.

  19. Platform building unite industrial associations and institutions to push collective action dialog with central and provincial government to enhance lawmaking and enforcement • CECPA issue practical guide for Chinese enterprises to establish compliance system training and certification for compliance practitioners platform for market participants to share knowledge and address compliance challenges

  20. Challenges • 2.Compliance implementation of Chinese enterprises • Positioning and responsibilities of compliance functions in corporate governance compliance related functions in SOEs • internal control • internal audit • enterprise risk management • Discipline Inspection & Supervision • Legal Department 3*

  21. Case studyChina Railway Group Coordination of related function to jointly enhance corporate compliance Three defenses of compliance: -Business Sectors -Law and Other Internal Control Departments -Discipline Inspection & Audit Department

  22. Thank You！ liuyuyang518@163.com

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