Below, we will give you an overview about the basic Chinese legal framework and different types of commercial corruption. Followed by the legal advice for companies dealing or preventing this to happen.

Short excursion: The anti-corruption campaign under Xi Jinping

Ten years ago in 2012, Xi Jinping implemented and carried out the largest organized anti-corruption campaign, with the goal to crack down “tigers and flies” (a synonym for high officials and local civil servants). Since then, over 4.5 million people have been investigated and more than 200,000 officials were standing under legal action; according to the Central Commission for Discipline Inspection (CCDI). Even though state corruption or public officials are affected here, foreign companies and private sectors are slowly coming into play as well. In 2014, a large British pharmaceutical company was fined half a billion dollars for bribing doctors and hospitals promoting their products. This policy and crackdown will continue, as President Xi Jinping stated after the 20^th Party Congress report to continue pursuing corruption in China.

What are the different types of commercial corruption in China?

Passive bribery, extortion and embezzlement committed by a company employee

The following behaviour is classified as criminalization:

• Illegally taking possession of the company’s money
• Unlawfully accepting money or property from other people in return for the benefit they seek for that person

Penalties for briberies start from three years fixed-term imprisonment for “relatively large” amounts of money. Under serious circumstances one will be sentenced up to 10 years of prison and “particularly huge” crimes can have a life imprisonment. All penalties include fines.

Bribing a company employee

In the Criminal Law in Article 164 it is stated, that giving money or properties to company employees is illegal and sentenced with either up to three or up to 10 years of imprisonment, depending on the crime.

The company committed a bribery

For example, ­­­­­­the company bribed an employee. After Article 164 of the Criminal Law, there will be a fine for the company and person who was directly in charge of this crime. These people will be liable for a fixed-term imprisonment.

Even if the activity does not end in a crime, they can still be liable and might receive a fine between 10,000 – 200,000 RMB.

How do I prevent corruption in my company?

Of course, there are some steps and procedures one should implement in their company to reduce the risk of corruption among employees. These e. g. would be:

What can I do as a company if the worst case happened?

Steps to take depend on the severity of the violation. But still, there are multiple things and steps a company needs to be aware of. Independent investigation by an internal audit / compliance team, or a third-party company. Depending on the outcome, there are a couple of actions possible:

• Persuading the employee to resign
• Terminating the employee for the involved reasons (e. g. violation of contracts, code of conduct etc.)
• If vendors are included, terminate the contracts with them
• Implement crisis management if the situation has already been revealed to the public

Consequences for non-compliance

When dealing with corruption prevention, it is essential for companies to build their own defence mechanism and learning how to deal with these circumstances in case anything happens. Committing of bribery by an employee, counts as an act of the company itself and therefore undertakes civil and criminal liabilities. Except when e. g. the competitive advantage or seeking transaction opportunities are not influenced by the conduct of the employee.

If government bodies are involved in the investigation, companies should cooperate and provide the asked information. Concealing or obstruction may cause harsher punishments (such as higher fines and penalties for the people involved). On the opposite; good and well cooperation can decrease the severity of the punishment or might even remove it entirely (based on clauses of the Criminal Law). It is advisable for companies to emphasize on more communication and support with everyone involved in order to better cooperate with the authorities at the end of the investigation.

Our legal advice

All in all, no one hopes to find corruption in their own company. If it happens, one should know what the next steps will be. Implementing a well-connected compliance system into the company from the beginning on will give a good base and is parallel a significant method to prevent corruption. Understanding the legal boundaries of the Chinese law and implementing them into the company and the employees is essential. We advise to recruit a Board Direcotr for your company in China – overseeing and ensuring the compliance of your company. He brings in vast knowledge regarding the Chinese legal system, language and culture.

Management Expertise of Seres Management

Do you have any questions regarding the Board of Director, supervision or coaching? Then please feel free to contact Seres Management and leave us a message.

David Schulte has also experience in being a Board Director in China and Far East Asia. Through years of experience and specific knowledge of the German, international, and Chinese business environment, David Schulte has successfully supported several compliance and managerial issues in China.

Welches Business Visa kann man beantragen?

Für die Einreise in die Volksrepublik China gibt es für geschäftliche Zwecke das M Visum mit

1. Single Entry (1) mit einer Gültigkeit von 180 Tagen und einem maximalen Aufenthalt von 30 Tagen
2. Two Entries  (2) mit einer Gültigkeit von 180 Tagen und einem maximalen Aufenthalt von 30 oder 60 Tagen
3. Multiple (M) Entries mit einer Gültigkeit von 180 oder 365 Tagen und einem maximalen Aufenthalt von 30, 60 oder 90 Tagen

Wo kann ich das Visum beantragen?

Das Chinavisum wird an folgender Stelle beantragt.

Chinese Visa Application Service Center (visaforchina.cn)

China Visa Application Service Center

Schönbrunner Straße 108, Top 1.01

1050 Wien

+43 1 544 359 111 oder +43 1 544 3601

viennacenter@visaforchina.org

mit den folgenden Öffnungszeiten.

• Antrag: gemäß Online-Terminvereinbarung
• Abholung: Montag, Mittwoch und Freitag zwischen 09:00 und 12:00 Uhr

Wie beantrage ich das M Visum und welche Unterlagen benötige ich?

Das Online- Antragsformular und die Online-Terminvereinbarung können unter folgendem Link vorgenommen werden.

首页-中国签证申请服务中心 (visaforchina.cn)

Für die Beantragung benötige ich folgende Unterlagen.

• Original des Reisepasses mit einer maximalen Gültigkeit von sechs Monaten ab Einreise (und mindestens zwei freien Seite für Visum und Ein- und Ausreisestempel)

• Kopie des Reisepasses

• Kopie des zuletzt ausgestellten Chinavisums (hier wird in der Regel ein gleichartiges oder besseres Visum ausgestellt; wurde ein Multiple M Visum ausgestellt, so sollte der Antragsteller dieses wieder bekommen)

• Reisepassfoto in Farbe und mit neutralem Hintergrund

• Ein Einladungsschreiben ausgestellt von einer lokalen Behörde oder Firma in China vor Ort

• Das digitale Antragsformular

• Mitbringen der ausgefüllten Health Declaration

• Ausgefülltes und unterschriebenes Datenschutzformular

• Meldezettel (sollte StaatsbürgerIn nicht aus Österreich stammen)

• Anmerkung: für ein M Visum ist Kopie der Flug- und Hotelbuchung nicht vorgeschrieben, kann aber vom Visa Service Center angefordert werden

Seit 2019 muss jeder Antragsteller / jede Antragstellering persönlich beim Visa Center erscheinen, um alle zehn Fingerabdrücke digital abspeichern zu lassen.

Direkter oder indirekter Antrag des Visums

Es gibt die Möglichkeit, entweder das Visum selbst zu beantragen, oder dieses über eine Agentur einreichen zu lassen.

Hier ein paar zu empfehlende Agenturen.

• ARC Consulting GmbH,
• Wien: Visum für China in Wien. Visa Center

Für Deutsche

Was für ein Business Visum kann ich beantragen?

Für die Einreise in die VR China für geschäftliche Zwecke ist das „Geschäftsvisum M“ vorgesehen mit folgenden Einreisemöglichkeiten:

1. Einmalige Einreise
2. Zweimalige Einreise (innerhalb von 90 oder 180 Tagen)
3. Mehrfacheinreise (innerhalb von 9 bis 24 Monaten)

Entsprechend der Firmeneinladung wird das Visum in der Regel für 30, 60 oder 90 Tage gewährt.

Bei einer Einreise von China aus nach z. B. HK, Macao oder ein Nachbarland von China mit einer anschließenden Rückreise nach China wird ein Visum mit mind. zweimaliger Einreise empfohlen.

Wo kann ich das Visum beantragen?

Die Visa Application Center befinden sich in

Berlin

Frankfurt

Hamburg

München

Düsseldorf

Bitte entnehmen Sie die Adresse, Öffnungszeiten und Annahme- wie Ausgabezeiten den jeweiligen Links.

An folgender Stelle wird das Visum online beantragt:

Chinese Visa Application Service Center

Wie kann ich mein Visa beantragen und welche Unterlagen benötige ich?

Das Online-Antragsformular sowie die Online-Terminvereinbarung kann unter diesem Link vorgenommen werden:

首页 中国签证申请服务中心

Folgende Unterlagen werden für die Beantragung eines Geschäftsvisums M benötigt:

• Original Reisepass mit einer Gültigkeit von mindestens 6 Monaten ab Antragstellung und 2 freien Seiten für Visa
• Vollständiges Visa-Antragsformular und aktuelles farbiges Passbild
  • Anforderungen Passbild: ohne Kopfbedeckung und von vorne
  • Größe: 48mm x 33mm
  • Weitere Anforderungen
• Nachweis der Aufenthaltserlaubnis (gilt für alle welche ein Visum für ein Land beantragen von welchem sie keine Staatsangerhörigkeit besitzen)
• Kopien vorheriger chinesischer Reisepässe oder vorheriger chinesischer Visa
• Unterlagen hinsichtlich gewerblicher Tätigkeiten bzw. Einladungsschreiben eines Handelspartners aus China oder Einladungen zu Messen. Folgende Angaben müssen auf dem Einladungsschreiben enthalten sein:
  • Persönliche Daten vom Antragsteller (vollständiger Name, Geschlecht, Geburtsdatum, Passnummer)
  • Angaben zur geplanten Reise (Ein- und Ausreisedatum, Reisezweck, Reiseziel), Auskunft über jegliche finanzielle Unterstützung während des Aufenthaltes, Beziehung des Antragsstellers zu einladenden Person
  • Angaben über die einladende Person / Institut (vollständiger Name, Adresse, Telefonnummer, Stempel, Unterschrift der einladenden Person / Institut

Wie viel kostet mich das Visum?

Die Visagebühren (ein- / zwei- / mehrmalig) für Staatsangehörige der Schengen-Staaten belaufen sich pro Person auf

125,45 EUR (normal)

161,15 EUR (per Post)

Die Gebühren sind von der MwSt. ausgeschlossen und werden vom Generalkonsulat erhoben; die Servicegebühr vom Visa Center. Daher setzt sich die Gesamtgebühr folgendermaßen zusammen: Visagebühr + Servicegebühr + MwSt.

Wer kann alles einen Visa Antrag stellen?

Man kann den Antrag persönlich stellen oder einen Dritten beauftragen

Wie lange im Voraus kann ich meinen Antrag einreichen?

Der Antrag sollte rechtzeitig vor der Abreise erfolgen; empfohlen wird 1 Monat vor Abreise, keinesfalls aber 3 Monate vor Abflug.

It has been almost ten years since Seres Management was founded in January 2013, shortly after my relocation from Beijing, China, back to Vienna. Seres Management started as a one-man company offering an interim service manager for Western subsidiary companies in China during challenging times. Since then, the business model has changed drastically. Now, there is a team of three serving investors and top managers in regard of Asia challenges. The competence region now not only covers China but whole region of Greater China and Southeast Asia. From managing a single entity before to now being in the Boards of holding companies with numerous subsidiaries in Asia, we now offer the adequate package for our clients, may it be the provision of an interim manager, offering strategic management advice, coach investors and top management or filling the role of the Board Director having Asia expertise.

Seres Management stands out when it comes to hands on management experience in Asia and all team members have excellent cross-cultural skills.

The new business model was presented last weekend in the Bavarian mountains to a selected round of strategic business partners. One of the most important steps here is the launch of the new Seres Management website where we just launched the go live.

So 2023 will bring changes for our valued clients by offering them more tailored solutions for enhancing investments and Asia and optimizing operations locally. Our service offerings target investors and top management in Europe and the North America.

Here, Seres Management will be the key partner for establishing a stable and professional bridge between headquarters and operations in Asia.

CHINA IS OPENING UP

The good news is that China is opening up. Mass testing was almost completely scrapped and citizens will need no more a QR code to enter any public places. Yet, incoming travellers still need to quarantine 7+3 days. Rumour has it that quarantine conditions improved drastically, here better service offerings and food at the quarantine hotels. A full opening up of the country can be expected before mid-2023.

You better note that there are two types of companies which are running into serious trouble. The first ones are companies which are not competitive in the long run and the other ones are startups depending on external financing. So if you are one of the two, then you better be well prepared.

The economy will not be the same after these lockdown times and you are advised to not only mitigate the risk but also work on your upcoming opportunities. What if your major competitor fails to manage the crisis and you will come out on top? What if you can offer new products which were hard to sell before? What if your clients now appreciate your high service level and support which they ignored in the past? What if you finally manage to buy your target company?

So awareness and information are king during these times. This means not just sitting at home in your home office and react to requests from your team. You have to actively manage your operations and especially work on your opportunities!

So you should focus on gathering crucial information and data which is key to long-term success. Involve the whole team, involve your specialists. This applies to the supply chain, logistics, R&D, sales/services and possible M&A targets. What major changes does the situation bring? If I do not get the parts I need, where can I get them. Or can I control supply? What if my competitor does not get the parts I have? Maybe I can acquire supplier X. So you should closely watch the supply market, have yll relevant team members involved in this task, have weekly (online) meetings to exchange newest information and maybe decide on adequate measures. This applies to all other fields of concern as well.

You will see that just after a couple of weeks you will not only be able to make an assessment but to really be ahead as you have all necessary information and data to position yourself ahead of your competition. Just imagine the impact if one or two competitors will not survive the crisis. What do you have to do to come out on top of it. The companies who wait for their outcome and hope on financial survival might be able to keep their status quo but will not number one for long.

A companies success still depends on profitability not cost saving. So you better evaluate your fields of growth and increasing competitiveness. Choose who in your team you want to invlove in the process and get down to the table and start real work! Wish you all success!

And what does this teach us from the Chinese experience? Supply already has shown that dependencies on China are a major risk for the company. But what if I have a good relationship with my key suppliers and my competitor not. Now there is a concern that Chinese companies take the Covid-19 crisis as an opportunity to acquire companies in the West. Why not acquiring companies in China? Why not entering crucial strategic partnerships with your Chinese partners to be on top globally? There are plenty of chances and thus I recommend get in touch with your Chinese colleagues and business partners! Reach out, these are the time of opportunity!

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The upcoming articles will look at the most important tasks of managing your company and employees. Please note that the most affected companies are either companies who are already not profitable or start-up companies depending on constant financing. If you are in the first group, you can be prepared for real challenges up to come. If you are in the latter, you have to have a plan of how to guide your company through these difficult months. You have to be aware that such crisis situations as we currently face bear opportunities we never had before, so we should not only look onto the Coronavirus times as times of crisis.

During the next days, we will look at the following topics: AWARENESS AND CHALLENGES, HOW TO MANAGE YOUR TEAMS, INFORMATION GATHERING AND THE POWER OF HAVING INFORMATION, RISK MANAGEMENT, STABLE CASH FLOW AND FINANCING, OPPORTUNITIES, THE ROAD TO RECOVERY.

We will look at all of these topics from the Investment and Management perspective and reflect these situations with China in regard of similarities and differences. Such shall give you a thorough understanding of how and when to undertake the most appropriate investment and management decisions.

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Stay close to your team and employees in China, they need your support the most. I recommend to look for alternative working models such as working from home or to base the work schedule on a flexible time plan. Postpone unnecessary business travel and communicate more via online media such as video conferencing. Get in touch with your China team(s) now and clearly communicate of how work arrangements will be done, but always in a responsible manner which guarantees that all of your employees stay safe! And do not forget your trustful business partners. To fulfil contractual obligations is not only a challenge for your company but also for your business partner. So before you announce the force majeure case, better think about finding a solution which takes your and your business partner’s interest into account. Do not forget, business is all about people!

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