Shanghai court publishes white paper on commercial bribery offenses: Key considerations

The Shanghai No. 2 Intermediate People’s Court recently published a white paper examining commercial bribery-related offenses from 2020 to 2024.

These offenses, as defined under the Criminal Law of the People’s Republic of China (PRC) and relevant judicial interpretations, include:

• The offering and accepting of bribes by non-state employees (“Non-State Functionaries” under the PRC Criminal Law)
  
  
• The offering and accepting of bribes by state employees (“State Functionaries”)
  
  
• Bribery involving companies
  
  
• Facilitation of bribes to state employees
  
  
• The offering and accepting of bribes by individuals using influence
  
  
• Offering of bribes to foreign public officials

The white paper provides insights into recent criminal enforcement trends, identifies high-risk sectors and common bribery schemes, and offers guidance for companies seeking to strengthen governance frameworks and mitigate bribery-related risks.

In this article, we detail the white paper’s insights and provide key compliance considerations for companies.

Key enforcement trends

Between 2020 and 2024, the jurisdiction of the Shanghai No. 2 Intermediate People’s Court, which covers nine northern districts of Shanghai, concluded 351 commercial bribery cases involving 433 defendants. Annual case volumes ranged from 57 to 89, with a peak in 2023.

Among these 351 cases, seven categories of bribery-related offenses were most prevalent. Cases involving the acceptance of bribes by non-state employees accounted for nearly half of all commercial bribery cases (183 cases, 49.46 percent). This was followed by cases involving the acceptance of bribes by state employees (91 cases, 24.59 percent) and cases involving the offering of bribes to non-state employees (50 cases, 13.51 percent). Other commonly charged offenses included offering bribes to state employees, the offering and accepting of bribes by companies, and the offering of bribes to companies. None of the cases involved bribery of foreign public officials or influence-based bribery.

High-risk sectors included construction, finance, commerce, internet services, real estate, advertising, and catering, which together accounted for more than 60 percent of the cases. Bribe amounts varied significantly by offender type: State employees accepted an average of CNY2.87 million per case, compared to an average of CNY1.32 million for non-state employees.

Shanghai courts imposed financial penalties – primarily fines and confiscation – in approximately 86 percent of cases, typically in addition to custodial sentences. Probation rates varied by offense category. For example, courts granted probation in 53.47 percent of cases involving non-state employee offenses, compared to approximately 31.97 percent of cases involving state employee offenses.

Risk patterns in bribery cases

Bribery methods

The white paper identifies several evolving patterns in bribery practices:

• Virtual and non-conventional benefits: Bribes increasingly take non-traditional forms and are no longer limited to cash, gold, jewelry, antiques, or luxury goods such as premium tobacco, alcohol, or tea. Instead, they now frequently involve property-related or intangible benefits, including discounts, shares or equity interests, dividends, expected profits, pre-paid membership cards, travel expenses, vouchers, and similar benefits.
  
  
• Disguised civil and commercial arrangements: Bribery is often concealed within ostensibly legitimate civil or commercial transactions, such as loans, consulting agreements, sham employment arrangements, undervalued asset transfers, and equity or stock transactions.
  
  
• Indirect and deferred exchanges: Intermediaries, often relatives or close associates, are commonly used to facilitate the transfer of bribes. In some cases, benefits are deferred until after officials leave their positions, taking the form of consulting fees, “revolving door” employment, or strategically timed resignations.

Among the 351 cases reviewed, internet-related sectors – including e-commerce, social media, and digital payment platforms – have emerged as growing hotspots for bribery (28 cases). Bribery in these sectors is frequently linked to the allocation of traffic, ranking recommendations, and access to data resources. Employees who control these resources often use rule-setting authority and information monopolies to seek illicit gains. In the digital economy, traffic is largely a key asset for companies seeking to increase profits, while employees may view control over traffic as a means of personal enrichment. This dynamic, combined with rapid industry iteration, intense competition, and unclear or incomplete regulatory frameworks, has made the internet sector particularly vulnerable to bribery risks, according to the white paper.

Over the past five years, bribery has also remained prevalent in public-service sectors such as education, healthcare, elder care, and housing security. These offenses increase service costs and distort fair competition. In the healthcare sector, bribery schemes commonly involve kickbacks and falsified invoices to influence procurement decisions and prescribing practices. In education, cases have involved textbook procurement, school uniform contracts, and campus construction projects.

Profile of offenders

The white paper reported that commercial bribery increasingly involves young, well-educated professionals, particularly in cases involving non-state employees. Third-party intermediaries, such as financial agents and real estate brokers, frequently play a role in facilitating systemic corruption.

In non-state employee bribery cases, offenders are predominantly corporate personnel in operational or managerial roles, often responsible for procurement, sales, or resource allocation. Among the 331 defendants in 233 non-state employee bribery cases, 61 percent were under the age of 45 and 58 percent held a bachelor’s degree or higher. The white paper notes that this trend is especially pronounced in non-state employee cases, where intense competition and performance-driven incentive structures in emerging industries have fostered short-term thinking. As a result, according to the white paper, some highly educated young professionals have come to view bribery as acceptable or normalized behavior.

In cases involving state employees, public officials exercised their authority in areas such as project approvals, fund allocation, and contract awards to confer advantages on companies. Companies, in turn, provided bribes in exchange, creating a closed loop of power-for-money transactions.

Third-party intermediaries also played a significant role, particularly in sectors such as financing, real estate, and visa services, by establishing networks that channeled improper benefits under the guise of legitimate professional services.

Root-cause analysis

The white paper identifies three primary drivers of bribery:

• Cost-benefit mindset: Many offenders approached bribery through a cost-benefit lens, weighing anticipated gains – such as securing contracts, obtaining regulatory approvals, or monopolizing markets – against perceived risks, including fines or imprisonment. Competitive pressure and performance-driven corporate cultures often reinforced this calculation.
  
  
• Weak internal controls: Companies implicated in bribery cases frequently lacked clear decision-making processes and robust internal controls. Key personnel were granted excessive discretion, enabling them to disguise bribes as legitimate expenses, such as “public relations” or “consulting” fees. Inadequate approval procedures for expenses and contracts, combined with ineffective whistleblower protections, allowed improper payments to pass through internal systems with limited scrutiny. Performance-driven cultures prioritized results over compliance, creating pressure on employees to “get things done” even through bribery. In some cases, senior management tolerated or participated in such practices, reinforcing a permissive environment that prioritized results over compliance.
  
  
• Fragmented legal framework: The white paper notes that China has not yet enacted a unified anti-commercial bribery law. Existing rules are dispersed across the PRC Anti-Unfair Competition Law, the PRC Criminal Law, and various judicial interpretations, resulting in an incomplete legal framework and inconsistent enforcement standards, according to the white paper. Under the PRC Criminal Law, bribery-related offenses are divided across different chapters; for instance, certain offenses such as accepting bribes by non-state employees, offering bribes to non-state employees, and bribing foreign officials are categorized as crimes that disrupt market order, while others may be classified as corruption and bribery crimes. According to the white paper, this fragmented structure complicates efforts to establish a coherent and systematic regulatory regime. Although judicial interpretations have expanded the definition of “bribery” to include certain property-related benefits – such as home renovations, pre-paid membership cards, travel expenses, and debt forgiveness – current rules still do not adequately address newer forms of bribery, including equity transfers, virtual assets, and deferred benefits arising from “revolving door” employment arrangements.

Recommendations

The white paper proposes a series of practical measures to reduce bribery risks. These recommendations are tailored to multiple stakeholders – including legislators, enforcement authorities, judicial bodies, and companies – and advocate a two‑pronged approach: deterring misconduct through effective punishment and reducing risks through strengthened governance.

• For legislators: The white paper encourages lawmakers to consider unified legislation that clearly defines commercial bribery offenses, enforcement scope, and applicable penalties. Such legislation should align with international standards and incorporate extraterritorial provisions where appropriate. The white paper further recommends increasing the cost of violations by expanding fiscal penalties to cover all offenders, including individuals within companies who accept bribes but may currently fall outside the scope of monetary penalties under existing laws. For high-risk sectors where professional qualifications are critical, lawmakers are encouraged to introduce qualification-based sanctions, such as bans or restrictions on industry practice, to prevent repeat offenses.
  
  
• For enforcement authorities: The white paper urges enforcement authorities to investigate both the giver and the recipient of bribes, rather than focusing solely on the recipient side of the transaction. It calls for enhanced coordination across agencies through mechanisms such as shared blacklists in procurement, bidding, and credit systems, ensuring that offenders face consequences across multiple domains. The white paper also recommends enforcement authorities use digital tools, including building intelligent monitoring systems, establishing cross-departmental data-sharing frameworks, and forming specialized teams to improve the detection of emerging and concealed bribery schemes. In particular, enforcement authorities are encouraged to strengthen their ability to identify corruption disguised as legitimate transactions or procedures.
  
  
• For judicial bodies: The white paper recommends that judicial bodies issue tailored judicial recommendations to companies involved in bribery cases, requiring rectification within specified timeframes and conducting follow-up reviews to assess compliance. It also encourages judicial bodies to organize compliance education initiatives and deepen engagement with companies through practical measures, such as permitting employees to observe court hearings involving bribery cases and offering on-site legal training to explain relevant laws, common bribery practices, and representative case studies.
  
  
• For companies: The white paper encourages companies to establish comprehensive anti-bribery compliance programs covering both employees and external partners. According to the white paper, these programs should include internal rules, such as employee handbooks, anti-bribery guidelines, and commitment letters, as well as compliance standards for suppliers and business partners, including bidding rules, supplier selection procedures, and gift and hospitality policies. Companies are encouraged to strengthen internal controls and conduct third-party audits, with particular attention to high-risk areas such as procurement, sales, bidding, marketing, and financial disbursements. The white paper notes companies should maintain secure whistleblower channels and enforce accountability through incentives for valid reports and strict sanctions for violations. It also encourages the use of technological tools, such as big-data monitoring and artificial intelligence (AI)-based expense review systems, to identify irregular transactions. Finally, the white paper urges companies to foster a culture of integrity through transparent processes and to engage with judicial bodies by observing court proceedings or inviting judges to deliver compliance training.

The white paper further highlights the importance of technology-driven enforcement calling on regulators to strengthen enforcement capabilities through the use of big data and AI to build sufficient monitoring systems that track financial flows and transaction patterns, identify anomalies, and generate investigative leads. It also emphasizes the need for enhanced data sharing among regulators to support information exchange and real-time collaboration on bribery-related matters, as well as the creation of specialized teams and training programs to ensure enforcement personnel can effectively apply data-driven tools.

Takeaways for companies

The white paper examines criminal trials conducted by approximately half of Shanghai’s courts over the past five years and identifies key trends that companies may consider. In light of the issues reflected in recent enforcement cases, companies may wish to re-assess certain aspects of their existing compliance programs with the following steps:

• Review procurement and bidding processes to ensure transparency and prevent the concealment of bribery
  
  
• Strengthen internal controls and audit mechanisms, particularly with respect to expense approvals and contract management
  
  
• Enhance third-party due diligence for suppliers, agents, and intermediaries
  
  
• Leverage technology, including big-data analytics and AI-based tools, to monitor transactions and identify anomalies
  
  
• Balance performance incentives with compliance expectations and avoid cultures that pressure employees to achieve results “at any cost”
  
  
• Promote a culture of integrity through regular training, clear policies, and secure whistleblower channels
  
  
• Stay attuned to enforcement trends and prepare for compliance, as regulators are expected to increasingly rely on technology-driven monitoring and cross-agency data sharing

For more information, please contact the authors.