Chinese New Year is upon us. This important Chinese holiday is celebrated not just in the world’s most populous country, but also in many other countries with significant Chinese populations. With the holiday comes the tradition of gift giving, intended to wish relatives and close friends good luck in the coming year. As many multinationals know, this tradition also extends to business relationships, and gifts are commonly exchanged among customers, suppliers and partners, as well as regulators and government officials with whom the businesses frequently interact.
This gift-giving tradition often collides with company compliance policies and, for U.S. companies or companies listed on a U.S. exchange, the restrictions imposed by the Foreign Corrupt Practices Act (FCPA). As every compliance professional knows, the FCPA generally prohibits giving anything of value to a foreign official for the purpose of obtaining or retaining business or securing an unfair business advantage. This generalized restriction results in thorny problems when it comes to Chinese New Year gifts to state-owned customers (whose employees are deemed foreign officials under the FCPA) or regulators. After all, what is the point of giving a gift to the customs inspector if not, at least in some small way, to improve your relationship and, hopefully, ease your regulatory difficulties?