As China’s economy continues to slow, China’s government continues to get more sensitive about how its citizens feel about it. One of the ways the Chinese government seeks to placate its citizens is by getting tough on foreign businesses. China is right now in one of its periodic crackdowns on foreign companies doing business in China. This has led many foreign companies to seek to determine their China risks. The following five questions are a good starting point in making that calculation.

1. How does the Chinese government categorize/view your industry? If your China business is in an industry in which foreigners are restricted (such as mining or publishing or education) or one in which China’s citizenry has major concerns (food and medicine are classic examples), your risk is likely to be high. If your China business is in an industry that requires you to joint venture with a Chinese partner, your risk is also likely to be high. The same is true if your business is in an industry the Chinese government views as its own province, such as SAAS, cloud computing, the internet, or telecom. On the flip side, there are certain businesses (like the Internet of Things or IoT) that China wants to encourage, and if your business comes within that sort of category, your risks will be considerably lower.

2. Are you in an industry the Chinese people consider to be their government’s responsibility, such as health care or education? A number of companies in those two areas have been subjected to government scrutiny for activities that the Chinese government probably would have been ignored in other industries.

3. Is your company primarily making money from China or spending money in China? If it is the former, you are at increased risk. Does your company have 20 foreign employees for every one Chinese employee? Your risk is high. Does your company have 300 Chinese employees for every one foreign employee? Your risk just went down.

4. Do you know what your Chinese staff are doing? Chinese staff often fail to realize foreign companies will be treated considerably differently in China than domestic companies, and they fail to act accordingly. Your Chinese staff will usually want to do things the “China way,” but you will be judged against the “foreign standard.” See China Compliance: Don’t Rely On Your China Staff.

5. What is the culture of your China business? If you are relying on “strategic” relationships to work around the letter or the intent of China’s laws, you are at greater risk. If you do not know well those with whom you are doing business, you are at greater risk. If things are happening that make you uncomfortable, you are at greater risk. If you believe that things are happening at your company behind your back, you are at greater risk. If you know that your company did not pay every RMB it should have paid in China taxes, you are at great risk. See China Tax Audits: The Day The Music Died.

China’s government is surprisingly tolerant of problems a foreign company has already fixed, and even of problems a foreign company is clearly in the process of trying to fix. But the Chinese government rarely tolerates a problem it discovers and about which the foreign company has done nothing. So if you check out clean for the above list, congratulations. But if you do not, start making changes now.

Dan Harris is a founding member of Harris Moure, an international law firm with lawyers in Seattle, Portland, San Francisco, Barcelona, and Beijing. He is also a co-editor of the China Law Blog. You can reach him by email at firm@harrismoure.com.