?Another U.S.-headquartered firm, Bain & Co., was raided by Chinese authorities—this time in Shanghai—where police took away computers and phones and questioned staff. No employees were detained. The raid happened after Mintz Group, also based in the U.S., was raided in March. We’ve gathered articles on the news from SHRM Online and other media outlets.
Increased Pressure on U.S. Companies
Chinese authorities have recently been increasing pressure on selected U.S. and other western businesses. Bain & Co., which is based in Boston, said April 26 that it was cooperating with authorities and declined to comment further. Shanghai police didn’t immediately respond to a request for comment on the reason for the visit. The episode highlights the increasingly risky environment for businesses in the world’s second-largest economy.
Detention of Japanese Citizens
China has detained Japanese citizens in recent years for alleged espionage, including most recently an employee of drug maker Astrellas Pharma, headquartered in Tokyo. The employee was detained in March.
(BBC)
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Chinese authorities also suspended Deloitte’s operations in Beijing for three months and fined the accounting firm for alleged deficiencies in past audits. The commerce ministry recently banned several Raytheon and Lockheed Martin executives from entering the country and prohibited Chinese groups from selling to the two U.S. defense contractors.
At the same time, China is welcoming some U.S. businesses, such as Apple, central to its future. Top Chinese officials, including Premier Li Qiang, have said the country is open for business, encouraging foreign investment.
Espionage Law May Have Chilling Effect
China’s rewritten law against espionage tightens state control over data and digital activities, an expansion of power that raises the risks for businesses operating in the country. Executives say the expanded scope of the legislation threatens to turn everyday interactions into national-security offenses. The amended law raises concerns that normal business activities, such as gathering intelligence on local markets, rivals and business partners, could be included in the broadened definition of espionage.
The revised law, which takes effect July 1, will require Chinese government agencies and media outlets to conduct publicity campaigns to promote awareness of espionage and ways of countering such activities.
Codification of Existing Practices
The espionage law amendments codified expansions that had largely been put into practice already, through other legal implementations and rules, according to Jeremy Daum, a senior fellow at the Yale Law School Paul Tsai China Center in New Haven, Conn.
Increasingly Pessimistic Business Climate
A March raid of the Beijing office of Mintz Group, a corporate investigations firm headquartered in the U.S., and detention of its five Chinese employees raised concerns among those conducting due diligence in China.
U.S. businesses operating in China are increasingly pessimistic about their prospects there, according to a survey by the American Chamber of Commerce in China. Two-thirds of respondents cited rising U.S.-China tensions as the top business challenge.
(BBC News and SHRM Online)