McDermott Will & Emery has a strategic alliance with MWE China Law Offices, a separate law firm based in Shanghai. This China Law Alert was authored by MWE China Law Offices lawyer Leon Liu and McDermott lawyer John Kocoras.
Recently, the co-founders of a firm primarily engaged in investigation-related services were arrested in Shanghai. The arrest indicates protected information laws are being rigorously enforced in China, and could signal a tipping point for information-gathering firms operating there.
Effects and Implications
Mitigating Risks and Ensuring Compliance
With increasing signs that protected information laws will be rigorously enforced, companies operating in China must be diligent to ensure compliance. A careful review of information policies, especially those related to anticorruption due diligence, internal audits and investigations, third-party agent reviews and even standard pre-transaction due diligence, will help companies prepare for and mitigate their risk. Vigilant review and vetting of any third-party investigation or information-collecting initiatives is essential to reducing exposure.
Robust investigation will remain critical to companies’ efforts to succeed in China while complying with China’s regulatory requirements and those in their home jurisdictions. Companies using licensed firms legitimately operating in the investigations sector, with appropriate methods of gathering and communicating information, are best positioned to capitalize on the opportunities that China offers.