Anti-Bribery Compliance in China: Aligning with the UK Bribery Act

When a UK-headquartered client tells you its Shanghai sales team has been "doing things the local way" for years, the question is no longer whether to investigate but how to investigate without triggering parallel exposure under both the UK Bribery Act 2010 and PRC criminal law. The two regimes overlap considerably, but they diverge on hospitality, on facilitation payments and — increasingly — on the treatment of the bribe-giver.

The two regimes in outline

The UK Bribery Act 2010 is, by design, extraterritorial and corporate-focused. Section 7 imposes strict liability on a "relevant commercial organisation" that fails to prevent bribery by an associated person, subject only to the "adequate procedures" defence. There is no de minimis for facilitation payments and no carve-out for reasonable hospitality if it is, in substance, intended to induce improper performance.

Chinese law approaches the same conduct through several instruments:

• The PRC Criminal Law, which separates bribery of state functionaries (Articles 385–393) from commercial bribery between private parties (Articles 163, 164 and related provisions).
• The Anti-Unfair Competition Law (most recently amended in 2019, with further revisions under consultation), which is the principal administrative tool against commercial bribery, enforced by the State Administration for Market Regulation (SAMR).
• Sector-specific rules in healthcare, finance and procurement, which have become noticeably more aggressive since 2023.

For UK practitioners the most important recent development is the Criminal Law Amendment (XII), which took effect on 1 March 2024. It materially raised penalties for bribe-givers across both public-sector and commercial contexts, expanded the list of aggravating circumstances (including bribery in healthcare, education, social security and emergency relief), and signalled a clear policy shift: China is no longer prepared to treat the giver as the lesser wrongdoer.

Where the regimes diverge in practice

Three divergences cause most of the difficulty when designing a single global programme.

First, state-owned enterprises. Under PRC law, individuals performing public duties within SOEs are typically treated as state functionaries, so a payment to a procurement manager at a centrally administered SOE is prosecuted under the harsher public-bribery articles, not the commercial bribery provisions. UK counsel sometimes underestimate this because the counterparty looks like a commercial customer.

Second, hospitality and gifts. The UK Bribery Act asks whether the benefit is intended to induce improper performance. Chinese enforcement is more formalistic and increasingly bright-line: in regulated sectors such as pharmaceuticals and medical devices, almost any gift, sponsored travel or speaker fee to a hospital-affiliated decision-maker is now treated as suspect. Festival gifts of nominal value to ordinary commercial counterparties remain culturally normal, but the band of "safe" conduct has narrowed considerably.

Third, facilitation payments. They are illegal under both regimes. The Bribery Act is well known for prohibiting them; what is less well understood is that Chinese law has never permitted them either, despite a residual practitioner belief to the contrary.

Third-party agent risk

The single largest source of exposure for UK-controlled groups in China is the distributor, sales agent, customs broker, licensing consultant or "business development" intermediary. Section 7 of the Bribery Act captures the conduct of associated persons performing services for the organisation; PRC law captures the principal through joint-liability theories and, increasingly, through SAMR's willingness to treat the principal as the economic beneficiary of the agent's conduct.

A defensible third-party programme for China-facing operations should include:

1. Risk-tiered due diligence, with enhanced review where the counterparty interacts with SOEs, regulators, hospitals or public tender processes.
2. Written contracts with audit rights, anti-bribery representations, termination triggers and clear scope-of-services definitions (vague "consulting" mandates remain a red flag for both SAMR and the SFO).
3. Commercially realistic commission structures — success fees disproportionate to the work performed will not survive either an SFO review or a SAMR inspection.
4. Periodic re-certification and transaction-level monitoring, particularly around tender wins and large rebate or marketing-support payments.
5. Local-language training for the third party's own staff, evidenced and retained.

Building one programme that satisfies both regimes

In our experience advising UK firms whose clients operate in China, the practical answer is rarely two parallel policies. It is a single global policy calibrated to the higher standard, with a China-specific annex that addresses local realities. That annex should cover, at minimum: the SOE classification problem; sector-specific rules in healthcare and finance; gift and hospitality thresholds expressed in RMB and aligned with internal pre-approval workflows; charitable donations and sponsorships, which are a recurring enforcement theme; and the interaction between PRC personal data rules and internal investigations.

The investigations point deserves emphasis. Under the Personal Information Protection Law (2021) and the Data Security Law (2021), reviewing employee communications, exporting custodian data to a UK review platform, or sharing investigation findings with overseas counsel can each trigger separate compliance obligations. A compliance programme that ignores how an investigation will actually be run in China is not adequate for Bribery Act purposes either, because the "adequate procedures" defence is judged in part on the organisation's capacity to detect and respond.

What to ask your China counsel for

When instructing PRC counsel on an anti-bribery matter for a UK client, the practically useful deliverables are usually:

• A gap analysis of the existing global policy against the PRC Criminal Law (as amended in 2024), the Anti-Unfair Competition Law and any relevant sectoral rules.
• A China annex in bilingual form, suitable for employee acknowledgement and SAMR inspection alike.
• A third-party onboarding pack: due-diligence questionnaire, integrity certificate, contractual clauses and audit template.
• An investigations playbook that addresses data export, employee interviews under PRC labour rules, and the threshold at which voluntary disclosure to PRC authorities should be considered.
• Training materials in Mandarin, with case studies drawn from public enforcement themes rather than from any specific judgment.

FAQ

Does the UK Bribery Act apply to a UK company's wholly-owned Chinese subsidiary? Yes. The Chinese subsidiary is an associated person of the UK parent for section 7 purposes, and the parent can be prosecuted in the UK for failure to prevent bribery by the subsidiary, regardless of where the conduct occurred.

Are corporate gifts at Chinese New Year still permissible? Modest, openly given gifts to ordinary commercial counterparties remain acceptable in principle, but they should be within written internal thresholds, recorded, and never directed at government officials, SOE decision-makers or regulated-sector personnel such as hospital staff.

How has the 2024 Criminal Law amendment changed enforcement risk? The amendment increased penalties for bribe-givers and identified aggravating circumstances in sensitive sectors. UK clients should expect Chinese authorities to pursue the giver more vigorously than historically and should reassess any legacy assumption that the receiving official bears the principal risk.

Can we conduct an internal investigation in China and send the findings to UK counsel? Yes, but it requires planning. Employee data review, cross-border transfer of personal information and disclosure of any data classified under the Data Security Law all engage PRC compliance obligations, and unmanaged transfers can themselves constitute violations.

How Eugen Law Firm assists

Eugen Law Firm acts as China counsel to UK law firms and their clients on anti-bribery policy design, third-party due diligence, internal investigations and SAMR inspections. We draft and localise compliance documentation, train China-based staff in Mandarin, and coordinate with UK counsel so that a single defensible programme works under both regimes. For instructions or a preliminary discussion, please contact [email protected].