General

"Influenced by the international environment, the African market as a whole is short of US dollars. All payments are made by letter of credit. At the same time, many countries have set more restrictions on imports and required various certifications. There are many challenges in business development..."

Wang Min, the founder of Zhongda Zhengguang Lighting Appliance Manufacturing Factory in Dongfeng Town, Zhongshan City, who has been deeply involved in the lighting industry for 20 years, created the brand Toplum overseas and invested in factories in Africa and South America, said that many international trade enterprises are in a dilemma of "going global".

"Although the COVID-19 has had a certain impact on the overseas development of enterprises since 2020, it was also during the epidemic that we increased our investment in Toplum brand. Through three years of growth, the brand performance continued to grow, and this year's performance quadrupled compared with 2021." Wang Min said happily that this is inseparable from the company's compliance management.

When it comes to compliance, Yang Tao, the founder and CEO of Changsha Feituo Information Technology Co., Ltd., the first Chinese international trade enterprise to enter the African e-commerce industry, also feels the same way. He said that Chinese enterprises have advantages in conducting business in Africa, but compliance is a weakness of Chinese enterprises in overseas development. This is mainly reflected in three aspects. First, businesses need to strictly comply with the requirements of local departments on commodity brands and intellectual property rights; The second is personal information security protection, which must have a local copy of the data; Third, the tax laws and regulations of different countries are different, and enterprises need to comply.

In fact, the situation encountered by Zhongda Zhengguang and Kilimall is not a case in point. Since 2020, the spread of COVID-19 has hindered the operation of the global economy. At the same time, trade protectionism and "anti globalization" are rampant. These have exacerbated the complexity and uncertainty of the global market, and some compliance risks have been further amplified. The compliance challenges faced by Chinese enterprises "going to sea" have become more severe.

In this regard, Lv Yue, a professor of the National (Beijing) Institute of Opening up Studies at the University of International Business and Economics, said that compliance is the premise for enterprises to "go global" and achieve stability, and compliance management capability is also an important manifestation of international competitiveness of international trade enterprises.

Lv Yue said that at present, in terms of compliance, China's "going global" enterprises mainly have three problems: first, lack of compliance risk awareness. In the international operation, there are still some blind spots in enterprises' understanding and judgment of new risks such as export control and financial sanctions, environmental protection risks and social responsibilities. Second, the enterprise's compliance management system is not sound. Without effective mechanisms and measures to identify and avoid risks, investment may fail or face huge fines, or even lose the opportunity to participate in international investment projects. Third, there is a shortage of legal talents in enterprises. The legal personnel of most domestic enterprises are generally not professional when dealing with foreign businesses such as foreign investment. There are certain limitations in the participation of enterprises in decision-making and the role of risk control. The support and protection role of the legal profession is still insufficient.

Facing these problems, Lv Yue believes that international trade enterprises should deal with them from three aspects:

First, actively cultivate a compliance culture and strengthen compliance awareness. All employees of departments engaged in foreign investment and overseas branches shall receive compliance training; Employees in high-risk areas and key positions need targeted compliance training.

The second is to establish a compliance management framework and improve the compliance management system. The enterprise compliance management system should have a self discovery, analysis and improvement risk early warning mechanism, risk identification mechanism and continuous improvement mechanism, develop risk prevention and control measures, monitor the effectiveness of measures in real time, and improve them in a timely manner. Overseas investment enterprises should not only establish and improve the compliance management system, but also establish an overseas risk prevention and control system.

Third, strengthen the allocation of legal personnel to ensure the effective operation of the compliance system. According to business needs, enterprises should closely cooperate with third-party professional institutions such as consulting agencies and law firms, and give full play to the role of third-party professional institutions in the whole process of overseas investment.

Yang Tao also shared his experience: "On the one hand, the company hired excellent local lawyers to do compliance as a special and long-term thing; on the other hand, we actively communicated with the local regulatory authorities. This is a point that many Chinese enterprises tend to overlook when going to sea for international trade."