Navigating Whistleblower Allegations: A Must-Know for Foreign Companies in China

The following shows a selection of topics, which foreign companies usually encounter in conjunction with allegations of whistleblower in China. How do whistleblowers usually report their allegations of corporate misconducts? That depends on the position and role of the whistleblower. If the whistleblower is an employee of the company, which is subject to the allegations, the whistleblower usually reports internally to its supervisor, chief compliance officer or to certain reporting lines of the company (e.g. whistleblower lines, speak-up lines). It could be also possible that the whistleblower is approaching the regulator. If the whistleblower is a competitor, it is likely that the whistleblower is raising the allegations towards the competent authority expecting that the authority will investigate and impose sanctions on the affected company. It is possible that the whistleblower will stay anonymous, to reduce the risk of retaliation. Does China have a unified whistleblower law? China does not have a unified whistleblower law. The legal framework in relation to whistleblowers consists of different laws and regulations. That includes, for example, the PRC Criminal Law and PRC Anti-Unfair Competition Law. Further, industry specific laws and regulations shall be taken into consideration. In the financial sector, for example, the China Securities Regulatory Commission (“CSRC”) and the Ministry of Finance (“MOF”) have released a number of laws and regulations to further develop the whistleblower mechanism. On 30 December 2025, CSRC and MOF have jointly released the Provisions for Awarding the Whistleblowers of Illegal Securities and Futures Activities, which became effective on the same day. The pharmaceutical sector is also subject to strict whistleblower laws and regulations. On 29 May 2025, the National Medical Products Administration, State Administration for Market Regulation, and MOF, have jointly released the Notice on Rewarding Internal Whistleblowers for Reporting on the Quality and Safety Issues of Drugs and Medical Devices, which became effective on the same day. Are companies in China legally obliged to establish a whistleblower system? Centrally administered state‑owned enterprises (i.e. enterprises, which are ultimately controlled by the central government of China) and listed companies are obliged to establish whistleblower systems. These obligations are stated in the Basic Rules for Enterprise Internal Control (2008) and the Measures for the Compliance Management of Central Enterprises (2022). Financial institutions in China are subject to specific requirements in conjunction with the establishment of whistleblower systems. Foreign-invested enterprises, which are often structured as a limited liability company, are usually not obliged by PRC law to establish a whistleblower system in China. However, it could be possible that the obligation to establish a whistleblower system in China arises from requirements of the group level abroad. Which legal consequences under PRC laws arise for those companies, which did not establish a whistleblower system, although they are obliged to do so? See for example the Measures for the Compliance Management of Central Enterprises (2022) (“Measures”). The Measures provide that centrally administered state‑owned enterprises, which did not establish a whistleblower system, shall be requested by the State-owned Assets Supervision and Administration Commission (“SASAC”) to make rectification, i.e. to establish the whistleblower system. If the breach of the Measures will lead to any losses of the concerned state-owned enterprise, SASAC will take further regulatory steps. This aforementioned scenario does not apply to foreign-invested enterprises. May whistleblowers receive financial rewards in China? That depends on the individual case and specifically towards whom the whistleblower is reporting the allegations. If the whistleblower is reporting allegations towards an authority, financial rewards may be granted under certain requirements. The Interim Measures for Rewards for Whistleblower Reports of Major Violations in the Field of Market Regulation, which have been released by the State Administration for Market Regulation and the Ministry of Finance (“Measures for Rewards of Whistleblower”) on 30 July 2021, effective since 1 December 2021, provide financial rewards for whistleblower in the amount of up to RMB 1 million. That requires that three requirements have been fulfilled. First, the allegation of the whistleblower shall refer to a “major violation of law”. The Measures for Rewards of Whistleblower define the “major violation of law”, which includes, for example, (i) major violations of laws and regulations concerning the quality and safety of food, drugs, special equipment, and industrial products, (ii) major violations of laws with regional and systemic risks and (iii) violations of law which are suspected crimes and transferred to judicial authorities for adjudication on criminal liabilities. Further, it is required that the whistleblower is a natural, but not a legal person. Further limitations on the qualification of the whistleblower as natural person apply. It shall be noted, that the Chinese regulator may request to return paid rewards, if the whistleblower provided falsified information, and further sanctions may be imposed on the whistleblower. Do whistleblower allegations trigger reporting obligations to PRC authorities? It must be assessed for the individual scenario whether a reporting obligation exists from the PRC law perspective. See for example Article 110 of the PRC Criminal Procedure Law, which could trigger a reporting obligation. Article 110 of the PRC Criminal Procedure Law provides that suspected crimes shall be reported to the Public Security Bureau, the People’s Procurator or the People's Court. If the recipient of the whistleblower allegations has information about suspected crimes, such reporting obligation could be triggered. Is it advisable for a company to self-report to Chinese authorities, even if it has no legal obligation under Chinese laws to do so? That must be diligently assessed from the legal, business and strategical perspective. It could be possible that Article 32 of the PRC Law on Administrative Penalty is applicable, so that the self-reporting will lead to a mitigation of the administrative fine. Foreign jurisdictions, i.e. jurisdictions outside of China, if applicable, and internal company policies of the affected company must be also assessed. Corporate reputation will play a significant role, if there is a risk that a third party could report the case to regulators or just through social media without addressing the allegations to a specific regulator. May the whistleblower allegation trigger a blacklisting or downrating at China’s Corporate Social Credit System? Just the allegation of a misconduct will not trigger a negative impact at China’s Corporate Social Credit System. However, if the whistleblower allegation leads to an investigation by an authority in China, which imposes then an adverse decision on the company, blacklistings and downratings could be imposed on the affected company. Are there obligations of diligence of the management in conjunction with allegations of whistleblowers existing? Article 180 of the PRC Company Law provides that “directors, supervisors, and senior managers owe a duty of diligence to the company, and in the execution of their duties, shall exercise the usual and reasonable care that a manager should have for the maximum benefit of the company.” If directors, supervisors or senior managers breach this duty of diligence, compensation claims from the company may arise on the affected manager for those losses of the company, which incurred due to the breach of this duty of diligence (Article 188 of the PRC Company Law). That means, that ignoring whistleblower allegations could trigger a breach of duty of diligence, which can under certain requirements trigger a personal compensation liability of the affected manager towards the company. Personal compensation obligation of the affected manager may also arise under certain requirements towards the shareholder of the company (Article 190 PRC Company Law). Does PRC law provide for the prohibition of retaliation against the whistleblower? Yes, for example, under PRC employment laws. According to Article 101 of the PRC Labor Law, a fine shall be imposed on the employer by the labor administrative department or other relevant departments, if the employer is found retaliating against the whistleblowing employee. Further, Article 30 of the Regulations on Labor Security Supervision provides that retaliation against the whistleblower shall be subject to the order of rectification by the competent labor authorities. Non-compliance with this rectification order shall trigger a fine on the affected company ranging between RMB 2,000 to RMB 20,000. Additional laws and regulations for the protection of the whistleblower against retaliation exist. Does the PRC Criminal Law provide legal protection against defamation by the whistleblower? Yes. See for example Article 246 of the PRC Criminal Law, which provides: "Whoever, by violence or other methods, publicly humiliates another person or invents stories to defame him, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, public surveillance or deprivation of political rights." The affected individual is entitled to report the defamation to the competent public security bureau.