Shenzhen, a sub-provincial city and special economic zone in the Guangdong province is considered China’s most economically dynamic municipality. This characterization is due in large part to the presence of major Chinese tech companies that have their headquarters in Shenzhen, including Tencent, Huawei, and ZTE. In many ways, these companies are driving the latest stage in China’s development, as it evolves from an industrial economy based on the manufacture of low value-added products to a more service-oriented economy that manufactures high value-added products.
Another recent trend in China has been a push, specifically from the central government, towards a corruption-free economy. Anti-corruption has been a focus of President Xi Jinping’s domestic policy since 2012, and his campaign has led to the arrest of high profile leaders, called “tigers,” such as former Politburo Standing Committee Member and oil baron Zhou Yongkang. But the campaign has also targeted “flies,” lower-level officials who may demand bribes of businesses seeking public procurement contracts or leases of land. Some experts have posited that this campaign has led to an additional boon to the economy as companies feel more empowered to resist demands of bribery, which adds more to the bottom line, according to the Financial Times.
In this context, it’s no surprise that the city of Shenzhen is leading the way in helping organizations develop systems to prevent and expose bribery of their employees and partners. In mid-June, the Shenzhen Institute of Standards and Technology (SIST) published the final version of the Anti-bribery Management System Shenzhen Standard, based on the new global Anti-Bribery Management Systems Standard, ISO 37001. This new standard, which went into effect on July 1, sets out guidelines for organizations to follow for designing an anti-bribery management system; and is drawing notice from at least 60 Chinese organizations, including ZTE, according to an article in Shenzhen Daily.
ISO 37001 was published by the International Organization for Standardization (ISO) in October 2016 and is the first international, certifiable standard for anti-bribery management systems. For more information on the ISO standard, see CREATe’s recent primer, “An Overview of the ISO 37001 Anti-Bribery Management Systems Standard.”
The Shenzhen Standard reportedly contains most of the key elements of the international standard and, like ISO 37001, addresses government and commercial bribery, inbound and outbound, for organizations of all sizes and their third parties. Notably, the Shenzhen Standard provides a single definition for bribery based a wide interpretation of what form a “bribe” can take, according to a recent article published in FCPA Blog. Much of the international standard is also adapted to better serve local audiences and make the prescribed management systems easier to implement for Chinese organizations, according to local reports.
Besides simply adopting ISO 37001, SIST is working with companies in Shenzhen to provide training programs in order to make certification to the standard more easily achievable. In addition, Shenzhen Daily reported that companies that obtain certification for their anti-bribery management systems will have an advantage in obtaining public procurement contracts. Moreover, although the Shenzhen Standard is only available to companies operating in Shenzhen, SIST reported that they are advocating that the central government adopt their own version of ISO 37001 or turn the Shenzhen Standard into a national standard.
Another city in the Guangdong province, Foshan, published guidance for state-owned enterprises to prevent bribery risks in IPOs that refers to ISO 37001, according to the FCPA Blog.
If the Anti-bribery Management System Shenzhen Standard spreads to other parts of China and is embraced by the Chinese business community, it will be a powerful tool to reduce bribery on the so-called “supply-side,” just as President Xi’s Anti-Corruption Campaign targets graft on the “demand-side.”