Legal basis: People's Republic of China (PRC) Criminal Law.
Article 165 A director or manager of a state-owned company or enterprise who, by taking advantage of his position, manages similar businesses of the company or enterprise for himself or others and obtains illegal benefits, if the amount is huge, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also or only be fined; If the amount is especially huge, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.
Article 166 Any staff member of a state-owned company, enterprise or institution who, by taking advantage of his position, commits any of the following circumstances, thus causing heavy losses to the national interests, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined: whoever causes particularly heavy losses to the national interests shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined: (two) to purchase goods from the units managed by their relatives and friends at a price significantly higher than the market, or to sell goods to the units managed by their relatives and friends at a price significantly lower than the market; (3) purchasing unqualified goods from units managed by their relatives and friends.