Selling into Germany from China: Why compliance is becoming part of the sales process

Why routine requests now need closer attention

Supplier questionnaires, ESG (sustainability) checks, sanctions screening and audits are standard tools of good corporate governance in Germany. But a measure that looks like routine from a German perspective can carry different legal meaning in China.

Two 2026 Chinese State Council instruments raised the stakes:

• Decree No. 834 — provisions on industrial and supply-chain security, covering information-gathering activities in China.
• Decree No. 835 — countering what China considers improper extraterritorial application of foreign law.

These sit alongside China’s Anti-Foreign Sanctions Law, data and cybersecurity rules, export controls and the Unreliable Entity List. The result isn’t a ban on due diligence, it’s a more complex environment where the reason for a request, the data requested, and the action taken afterward all matter.

Are supplier audits and ESG checks prohibited in China?

No, not as a general rule. Risk increases when a request:

• collects personal, sensitive or geographic data.
• transfers information outside China.
• implements a foreign sanction or measure seen as discriminatory.
• could lead to suspending or terminating a Chinese business relationship.
• exceeds what’s necessary for a clearly defined purpose.
• could affect supply-chain security.

Calling something an “ESG check” doesn’t determine its legal status. What’s actually asked, why, and what happens with the data does.

What this means for Chinese companies growing in Germany and Europe

For Chinese companies exporting into Germany, an increasingly important issue is the potential conflict between European compliance requirements and Chinese law.

In very practical terms:

• German/EU customers may demand more supply chain, sanctions, ESG, subsidy, or compliance information.
• Decree 834 can restrict certain types of supply chain investigations or information gathering in China if Chinese authorities consider them contrary to Chinese law. 
• Decree 835 can prohibit compliance with certain foreign measures that China considers improper extraterritorial regulation or sanctions. 

This can create a practical dilemma: a German customer may request information or actions to meet European requirements, while the Chinese supplier may need to assess whether providing that information or taking those actions creates issues under Chinese law.

For companies developing the German market, compliance questions can therefore become part of the sales process. The earlier they are identified, the easier it is to involve the right specialists, explain the situation to the customer and keep the commercial discussion moving.

A practical framework for selling into Germany from China

01Map the regulatory conflict first

Identify why the German or European customer is requesting specific information and which requirement may be behind it. Then assess the request against relevant Chinese requirements, including data protection, state secrets, cybersecurity, anti-sanctions and export controls.

02Involve compliance and local expertise early

Before responding to a customer request that may create regulatory concerns, bring together the relevant perspectives:

• Sales teams understand the customer relationship and the commercial context.
• Compliance or legal teams assess the potential exposure.
• Local experts can assess how the request may be interpreted under Chinese law.

This helps avoid a situation in which the sales team either agrees to something too quickly or simply rejects a customer request without explaining why.

03 Understand the “why,” not just the “what”

If a German customer requests information, clarify why it is needed, who will access it, where it will be stored and whether it will be transferred outside China.

Understanding the purpose behind the request can make it easier to identify potential restrictions and, where necessary, discuss suitable alternatives with the customer.

04 Look for workable alternatives

If a request cannot be fulfilled in its original form, this does not necessarily have to stop the commercial process. Depending on the circumstances, alternatives could include providing fewer data fields, keeping certain information locally or using a staged approach. The objective is to address the customer’s underlying requirement without unnecessarily creating additional regulatory risk.

05Define an escalation route

Sales teams should know when a customer request needs to be escalated internally. Typical triggers may include sensitive data, cross-border transfers, sanctions-related requirements or requests that could conflict with Chinese legal obligations.

Document the decision, the alternatives considered and the reasoning behind the chosen approach.

What sales and procurement should do differently

Sales teams often see warning signs first — a partner questioning a request, refusing a clause, or citing data-export restrictions. Escalate rather than making spontaneous commitments on audits, transfers or terminations.

Procurement should review standard questionnaires and audit templates before using them in China, and separate purely commercial criteria (quality, price, reliability) from regulation-driven ones — documented separately for a cleaner legal assessment.

Frequently Asked Questions

This article provides general business information and does not constitute legal advice. Companies should seek advice on their specific circumstances from qualified counsel in the relevant jurisdictions. 

Want to learn more about our experience working with Chinese companies? Read how PBS Sales supported a Chinese manufacturer of solenoid valves in developing new customers in Germany and Europe. Read the case study.

Sources and further reading

• FAZ: Geschäfte mit China bringen Risiken für Vorstände
• Freshfields: China’s new 2026 supply-chain security and counter-extraterritoriality rules
• Gleiss Lutz: China’s Decrees 834 and 835—conflicts of obligations
• Linklaters: New rules on supply-chain security and measures to counter extraterritorial jurisdiction
• Rödl & Partner: Supply chain regulations in China
• AWR Blog / Außenwirtschaftsrecht: Neue Verordnungen Nr. 834 und Nr. 835 des chinesischen Staatsrats