Doing Business in China For Dummies®

Managing Environmental Risks

Most FIEs take the view that although some Chinese companies may be able to push the envelope as far as environmental compliance goes, complying with the law in this area is generally best. China’s getting more serious about environmental compliance all the time. Even minor malfeasance can result in enormous potential liability for your company.

Surveying environmental crime and punishment

China doles out several types of punishment for violating environmental standards:

✓	Jail: If your company does something extremely egregious to the environment, your legal representative and other senior managers can go to jail. This result is rare.
✓	Curtailing or halting operations: The authorities can order your company to curb production or shut down, usually temporarily.
✓	Inability to expand: When a company gets to a point where its site can’t hold any more contaminants by law, it may not be allowed to expand the business.
✓	Fines: Fines are common. They don’t usually exceed 100,000 RMB.
✓	Cleaning up: Your company may have to remediate your site if it uses up its pollution quota. Also, China’s law is moving toward U.S.-style liability, in which a company can be liable for pre-existing pollution on a site.
✓	Bad publicity: Some cities, such as Shanghai, are putting environmental offenders’ names on the Internet. If you look at these sites, you may be surprised to see the names of a number of multinationals. This penalty creates the risk of damaging your reputation — ...