Meta Description:This FAQ summarizes key issues multinational companies face when conducting internal investigations in China, including data, labor, and regulatory concerns.
1. When do companies typically launch internal investigations in China?
Common triggers include:
- Whistleblower complaints alleging fraud, bribery, or harassment
- Unusual financial results or accounting irregularities
- Suspected misconduct by distributors, agents, or joint‑venture partners
- Requests from headquarters compliance teams or external auditors
Early, well‑planned action is critical to preserve evidence and manage risk.
2. What legal areas are most relevant for investigations?
Typical issues touch on:
- Labor law – how employees can be interviewed, disciplined, or dismissed
- Data protection and cybersecurity – collection, storage, and transfer of personal and business data
- State secrets and information security – especially for sensitive industries or government‑related work
- Criminal law and anti‑bribery rules – potential exposure for individuals and the company
Ignoring these areas can turn an internal investigation into a regulatory problem.
3. Can we freely collect and export data from China for global review?
Not always. China has increasingly strict rules on:
- Personal information and “important data”
- Cross‑border data transfers
- Security assessments for certain categories of information
Before exporting large volumes of emails or system data, you should assess whether local storage, anonymization, or regulatory filings are needed.
4. How should we approach employee interviews?
Best practices include:
- Making sure interview notices and processes comply with Chinese labor law and company policies
- Using bilingual interviewers or interpreters who understand local context
- Properly documenting questions and answers, with attention to privilege and confidentiality
- Avoiding coercive tactics that could later be challenged
Local counsel can help design scripts and protocols that respect both legal and cultural realities.
5. What are the risks of mishandling an investigation?
Risks include:
- Labor disputes and wrongful‑termination claims
- Administrative penalties for data or privacy violations
- Criminal exposure for certain investigative methods
- Loss of key evidence or witness cooperation
- Damage to relationships with regulators and business partners
A poorly run investigation can create more problems than it solves.
6. When should we inform or engage Chinese regulators?
The answer depends on:
- Nature and seriousness of the misconduct
- Industries and counterparties involved (e.g., state‑owned entities, public tenders)
- Potential overlaps with foreign laws such as FCPA or UK Bribery Act
You should coordinate any contact with authorities jointly with Chinese and international counsel to avoid inconsistent statements or unnecessary exposure.
7. How can Chinese local counsel support global investigation teams?
We assist by:
- Mapping local legal risks and required approvals at the outset
- Advising on data collection, access, and transfer limitations
- Participating in or conducting interviews in Chinese and English
- Evaluating disciplinary measures and termination strategies
- Providing China‑specific input for global investigation reports and regulator communications
If your organization is facing possible misconduct involving China operations, our regulatory and investigations team can help you design and execute a compliant, effective investigation plan.