Complying with anti-bribery requirements is a challenge for foreign enterprises investing in China where foreign direct investment (FDI) remained strong in Q1. Our Capital Agenda of French Companies in China offers best practices against bribery and corruption risks and examines China’s new initiatives which will impact FDI.
Foreign direct investment (“FDI”) into China, after surpassing the US$100 billion mark in 2010, remained strong in 1Q11. As reflected in its 12th 5-year plan, China intends to create a balanced economy with measures including upgrading its industry, developing its western region and developing green energy.
China’s need to secure long-term supply of resources, combined with high foreign reserves and abundant capital, as well as the gradual transformation of China’s economic model, has resulted in significant growth in China’s outbound direct investment (“ODI”) and this is expected to accelerate.
These provide abundant opportunities for French businesses to participate in the transformation of China’s economy as well as to partner with Chinese enterprises in their ventures outside China.
One of the challenges that may exist for foreign enterprises investing in China is to maintain competitiveness in the market while at the same time complying with anti-bribery requirements in both China and the country of origin. The topic of anti-bribery has received much attention in recent years with publicized cases involving high ranking government officials and multinational companies, and is expected to receive further attention from the government in 2011.
In line with its new economic strategy, China made revisions to the “foreign investment catalog” on encouraged sectors for foreign investments. China has also set up a security review committee for approval of foreign direct investments which might influence industrial or national security.