Your Sales Team Is Going Overseas. Is Your Compliance Programme?

A country manager sat down for what looked like an ordinary business meeting.

At the end of it, he handed the official across the table a bag of tea.

Inside was AUD 20,000 in cash.

She reported it before he left the building.

Two weeks later, federal police stopped him at the gate at Sydney Airport as he tried to board a flight home. He is now in custody in Queensland, charged with offering a secret commission to an agent, and a magistrate has refused him bail.

His employer, reported to be Growatt New Energy, a Shenzhen-based manufacturer of solar inverters and energy storage systems, is understood to have had an anti-bribery policy on file. Most companies in this position do.

That is the real puzzle. Not whether one employee broke the law — Australian courts will decide that — but why compliance failures like this keep happening at companies that already have compliance programmes, compliance training and, in this case, a listing prospectus describing exactly the controls that were supposed to prevent it.

The short version: the answer is rarely a missing rule. It is usually a mismatch between what the company rewards and what its compliance function is asked to police — a gap that widens the further an employee gets from headquarters, and one that, in this instance, also happens to sit inside a Chinese criminal-law provision most companies never think to check.

Why This Keeps Happening

In my experience, overseas compliance failures rarely trace back to management approving bribery. They trace back to management exporting commercial targets faster than it exports compliance culture.

Sales teams are measured on revenue. Country managers are measured on market access. Certification and regulatory-affairs staff are measured on how quickly approvals come through. Compliance, meanwhile, typically remains a legal-department responsibility — reviewed periodically, owned centrally, and physically absent from the room where the actual decision gets made. When incentives reward speed and compliance sits somewhere else on the org chart, commercial pressure does not disappear. It migrates toward whoever has the least supervision and the most discretion, which is almost always the person standing in front of the foreign regulator alone.

None of that appears in any statute. It is also, in my experience, the more reliable predictor of where a company's next compliance failure will come from than any gap in its written policy.

Governance Doesn't Export Itself

Many Chinese companies have become genuinely skilled at international expansion — reading foreign markets accurately, standing up overseas subsidiaries, hiring local staff, adapting products to local demand. Governance tends to internationalize more slowly than the business it is meant to govern.

A compliance manual cannot override a sales culture that quietly celebrates getting things done at any cost. That is not a criticism of any one company; it is close to a structural default. The more successful an overseas operation becomes, the less often anyone at headquarters actually watches how its people get things done — and the gap between the written policy and the daily behavior fills in with whatever the local incentive structure rewards, not with whatever the policy says.

Gifts are rarely the problem in themselves. They become the problem once an employee starts treating a regulator as a customer whose goodwill can be purchased, rather than a public official whose impartiality has to be preserved. That shift in framing — customer, not official — is usually gradual, rarely deliberate, and almost never visible from headquarters until something like a tea bag full of cash makes it visible to everyone at once.

The Legal Exposure Hiding Inside the Gap

This particular gap also happens to sit inside a piece of Chinese law that almost no compliance programme is built to test for.

Since Amendment VIII to the Criminal Law, effective May 1, 2011, Article 164 has criminalized giving property to a foreign public official or an official of an international public organization to seek illegitimate commercial benefit — on the same terms as domestic commercial bribery, and reaching a Chinese national's conduct anywhere in the world under Article 7's extraterritorial jurisdiction. A foreign prosecution does not close the matter under Chinese law either: Article 10 allows a Chinese court to prosecute the same conduct even after a foreign trial, though punishment already served abroad may reduce or eliminate a Chinese sentence. The same article can reach the company itself, not only the employee, where the conduct is genuinely attributable to the company rather than an employee's unauthorized use of its name (Article 164, paragraph 3; Supreme People's Court Interpretation on Unit Crime Cases, Fa Shi [1999] No. 14, Article 3).

The provision is, so far as the public record shows, almost never enforced — the interest it protects is a foreign state's, not China's, and these cases surface through foreign channels a Chinese prosecutor has little routine reach into. That is exactly why it matters for governance rather than for criminal exposure: a due-diligence checklist built around domestic bribery risk will not catch it, a compliance training built around domestic bribery risk will not mention it, and a company can be entirely thorough about the risk it knows to look for while missing the one written specifically for what its country manager just did.

Where This Actually Gets Tested

The written policy is tested exactly once — in the room, under pressure, with no one from headquarters watching. Everything before that moment is preparation; everything after it is cleanup.

That is also why this tends to surface at the worst possible time: during a listing. An IPO is not only a fundraising exercise. It is an audit of governance conducted by people whose job is to be skeptical of exactly the representation a prospectus makes about internal controls. Once an allegation like this becomes public, the question stops being whether the policy existed and becomes whether it ever reached the person who needed it — a question that exists independently of how the criminal proceedings conclude, and one that boards, sponsors and investors will keep asking regardless.

Before You Send Someone Overseas

Most of what follows is not new. It is rarely asked early enough to matter. Before an employee is sent to deal with a foreign regulator, certification body or licensing authority, someone should be able to answer:

• Who will they meet, and is any counterparty a public official or acting in that capacity?
• What gifts or hospitality are actually permitted locally — not what headquarters assumes is permitted?
• Who approves hospitality and gift spending before it happens, not after it is reported?
• How are that employee's expenses reviewed, and by whom, and how often?
• Who receives a report if that employee is asked for something unusual — and do they actually know that channel exists?

None of these questions requires a lawyer to answer. That is precisely why they are worth asking before the trip, not after the arrest.

Practitioner's Note

Chinese companies often treat international expansion as something that begins the moment products cross a border. It actually begins when the company's behavior does — when the incentives, the supervision and the culture that shaped how decisions get made at home have to survive being applied by someone standing alone in a foreign meeting room. Products create the opportunity. Governance decides whether the opportunity survives contact with the person representing the company when no one else is in the room.

Related Reading

• A Lawyer Helped a Debtor Hide a Receivable. The Court Held Him Responsible for It. — on how PRC criminal liability reaches beyond the person who obviously benefited from the underlying act.
• Someone Used Your Company's Name to Commit Fraud. You Are Not the Victim. — on what a company's own procedural standing looks like once a PRC criminal matter is already underway.

More on this area of practice: Cross-border Business.

This article discusses publicly reported facts concerning an active overseas criminal proceeding and a pending Hong Kong listing application. The individual involved has been charged, not convicted, and is presumed innocent; nothing in this article should be read as a comment on his guilt or innocence, or on the listing applicant's conduct or listing prospects. It does not constitute legal advice on any pending transaction, and the incentive-and-culture analysis reflects professional observation rather than any finding about this specific company.

Authorities cited: PRC Criminal Law (as amended by Amendment XII, effective March 1, 2024), Article 164, paragraphs 2–3 (foreign-official bribery paragraph inserted by Amendment VIII, effective May 1, 2011); Article 7 (extraterritorial jurisdiction over PRC nationals); Article 10 (effect of a prior foreign conviction). Supreme People's Court Interpretation on Certain Issues in the Trial of Unit Crime Cases (Fa Shi [1999] No. 14), Article 3.

Last reviewed: August 6, 2026