General

"Due to the impact of the international environment, the African market as a whole is in short supply of US dollars, and all payments are changed to letters of credit. At the same time, many countries have set more restrictions on imports, and also require 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, which has invested and established factories in Africa and South America, has been deeply involved in the lighting industry for 20 years, and has created its own brand Toplum overseas. This speech shows the plight of many "going out" international trade enterprises.

"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 good compliance management.

When it comes to compliance, Yang Tao, the founder and CEO of the first Chinese international trading company to enter the African e-commerce industry, is also sympathetic. He said that Chinese enterprises have advantages in conducting business in Africa, but compliance is a weakness of Chinese enterprises' 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, different countries have different tax laws and regulations, and enterprises need to comply.

In fact, the situation encountered by Zhongda Zhengguang and Kilimall is not unique. Since 2020, the spread of COVID-19 has hindered the operation of the global economy. At the same time, the trend of trade protectionism and "anti globalization" is 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 prerequisite for enterprises to "go out" and achieve stability and prosperity, and compliance management ability is also an important manifestation of the international competitiveness of international trade enterprises.

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

In the face of these problems, Lv Yue believes that international trade enterprises should deal with them from three aspects:

First, actively cultivate compliance culture and strengthen compliance awareness. All employees of departments and overseas branches engaged in work related to foreign investment 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's compliance management system should have self-discovery, analysis and improvement of risk early warning mechanism, risk identification mechanism and continuous improvement mechanism, formulate prevention and control measures for risks, monitor the effectiveness of measures in real time and improve them in time. Overseas investment enterprises should not only establish and improve the compliance management system, but also establish an overseas risk prevention and control system.

The third is to strengthen the allocation of legal talents and ensure the effective operation of the compliance system. According to business needs, enterprises should work closely with third-party professional institutions such as consulting agencies and law firms to 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 matter; on the other hand, we actively communicated with local regulatory authorities. This is a point that many Chinese enterprises are easy to ignore when they go overseas in international trade."