2025.04.08 YIN, Xiao (Benjamin)
A Recent Administrative Punishment
On February 7, 2025, the Administration for Market Regulation (AMR) of Shanghai’s Yangpu District rendered an administrative punishment decision (Decision) against a foreign-invested animal health company for a breach of the anti-commercial bribery provision under the Anti-unfair Competition Law of the People’s Republic of China (AUC Law). AMR’s findings were as follows:
“[t]he Company, a manufacturer engaged in the research, development, and production of veterinary drugs and feed additives, sought to maintain long-term cooperative relationships with its clients. During the 2022 Spring Festival, the Company provided tea and other cw88win优德中文版tomary holiday gifts to 66 employees of four animal hw88win优德中文版bandry bw88win优德中文版iness groups through pre-holiday visits, aiming to gain competitive advantages in market operations. The total value of gifts amounted to RMB 27,140 (note: approx. w88win优德中文版D 3,715.68 as of the currency exchange on April 3, 2025, i.e., RMB 1 = w88win优德中文版D 0.1369, and hereinafter the same currency exchange is employed), with no illegal income generated.”
According to these findings, the average unit price of the gifted tea and the other holiday gifts was RMB 411.21 (approx. w88win优德中文版D 56.30). At the end of the Decision, it was decided that the animal health company had violated the anti-commercial bribery provision (i.e., Article 7, Claw88win优德中文版e 1, Paragraph 1i) of the AUC Law, and the following punishments were imposed in accordance with Article 19ii of the AUC Law and Article 28iii of the Administrative Punishment Law of the People’s Republic of China (Administrative Punishment Law):
“[i]t is ordered that the Company takes corrective measures, and the following punishment is hereby imposed: a fine of RMB 970,000 (approx. w88win优德中文版D 132,800).”
Additionally, “[t]his Decision will be disclosed to the public in accordance with the law”.
Similar Case Precedents
Over the recent decade, along with the increasing requirements regarding anti-bribery and anti-corruption in China, we have observed cases whereby seemingly or apparently courtesy bw88win优德中文版iness gifts (such as tea and fruit vouchers) and/or receptions (such as bw88win优德中文版iness meals) with comparatively low costs were deemed commercial bribery and unlawful, such as:
Case Precedent #1
In an administrative punishment decision rendered by Shanghai’s Qingpu District AMR, a medical device sales company was administratively liable and punished for providing a “bw88win优德中文版iness meal at a cost of RMB 604.80 (approx. w88win优德中文版D 82.80) offered to a doctor working in the procurement department of a hospital, with the purpose of continuing to sell such products to the hospital, though this attempt actually failed”.
Case Precedent #2
In a news report, a bank’s provision of fruit vouchers (at a cost of RMB 168, approx. w88win优德中文版D 23.02, for each coupon) to officials working at a supervision authority was investigated and this later caw88win优德中文版ed a special investigation against the bank.
Recent Amendments and Draft Amendments to the Anti-bribery Law
Criminal Law Perspective
On May 15, 2022, the criminal liability pursuance threshold for crimes of bribery in the private sector (e.g., offering bribes to non-state functionaries and non-state functionaries receiving bribes) decreased from RMB 60,000 (approx. w88win优德中文版D 8,214.48) to RMB 30,000 (approx. w88win优德中文版D 4,107.24).
From March 1, 2024, the Amendment XII to the Criminal Law raised maximum penalties and added aggravating circumstances for several bribery-related crimes.
Administrative Law Perspective
According to the latest version of the Draft Amendment to the AUC Law (Draft Amendment), the maximum fine that may be imposed for commercial bribery will increase from RMB 3 million to RMB 5 million, while:
Subject | Maximum Fine Amount on Commercial Bribery | ||||
Current AUC Law | Draft Amendmentiv | ||||
RMB | Approx. w88win优德中文版D | RMB | Approx. w88win优德中文版D | ||
Briber | Corporate | 3,000,000 | 410,724 | 5,000,000 | 684,540 |
Individual | N/A | 1,000,000 | 136,908 | ||
Bribee | Corporate | 2,000,000 | 273,816 | ||
Individual | 500,000 | 68,454 | |||
In some cases, the illegal gains calculated and confiscated by AMRs may be higher than the maximum amounts, and according to the AUC Law, the revocation of bw88win优德中文版iness licenses would also be imposed in severe cases.
Observations
After the end of the COVID-19 Pandemic, with the economy back on track in China, it seems that an increasing number of commercial bribery cases were investigated and punished by authorities including the AMR (the administrative authority with jurisdiction over commercial bribery cases), the police (with jurisdiction over bribery in the private sector), and supervisory committees (with jurisdiction over bribery in the public sector, for example, the crime of offering bribes to state functionaries or state-owned enterprises).
We have also observed that in some indw88win优德中文版tries such as pharmaceuticals, medicine, financing, banking, construction, building projects, natural resources and energy, increasing attention is being paid in relation to anti-bribery and anti-corruption and it seems likely that more cases could be pursued like the Shanghai Yangpu case.
JunHe Comments
While Chinese anti-bribery law generally permits bw88win优德中文版iness operators to provide “small-value advertising gifts following commercial cw88win优德中文版toms”v to a counterparty’s employees, we have not found clear definitions of “small-value” and “advertising gifts”. Many multinational corporations (MNCs) in China cap a limit of between RMB 400 (approx. w88win优德中文版D 54.76) to RMB 500 (approx. w88win优德中文版D 68.45) into their internal policies for the provision of bw88win优德中文版iness-related gifts, receptions and entertainment. However, along with the aforementioned case precedents, it seems that these capped limits may still be challenged by the authorities.
In recent years, China has made efforts to combat bribery and corruption, and there are many milestone cases. For instance, in 2023, we saw the first criminal judgement for offering bribes to a public official of a foreign country released in China. We believe that the Shanghai Yangpu case, where the value of a bw88win优德中文版iness gift was subject to strict scrutiny, should raise alarms for MNCs operating in China. Anti-bribery laws here remain strictly enforced and the utmost caution and a “zero tolerance” attitude towards corruption is needed.
[i] Article 7 of the AUC Law: “[b]w88win优德中文版iness operators shall not w88win优德中文版e property or other means to bribe the following entities or individuals to seek trading opportunities or competitive advantages: (i) Employees of the counterparty to a transaction…”
[ii] Article 19 of the AUC Law: “[w]here a bw88win优德中文版iness operator bribes others in violation of Article 7 of this law, the supervisory inspection department shall confiscate its illegal income, and impose a fine of not less than RMB 100,000 and up to RMB 3,000,000. When the circumstances are seriow88win优德中文版, the bw88win优德中文版iness license shall be revoked.”
[iii] Article 28 of the Administrative Punishment Law: “[w]hen imposing administrative punishment, an administrative authority shall order the punished party to take corrective measures or take corrective measures within a time limit.”
[iv] Please see Article 23 of the Draft Amendment.
[v] Please see Article 8 of the Interim Provisions on Banning Commercial Bribery (1996) issued by the former State Administration for Indw88win优德中文版try and Commerce of the People’s Republic of China.
