Business concerned about raids on Western companies in China

Status: 05/10/2023 3:12 p.m

The Chamber of Commerce Abroad is alarmed by multiple raids on foreign companies operating in China. The police also arrested some local employees.

International companies in China are unsettled after the recent raids. According to the German Chamber of Commerce Abroad in China, there is also uncertainty among German companies in the People’s Republic. “The makes the companies here a bit nervous,” says Jens Hildebrandt from the Chamber of Commerce Abroad.

Legal certainty is of course important for companies. However, many of the laws and regulations in China that companies have to comply with are not clear. According to the Chamber of Commerce Abroad, this represents a challenge for companies.

consultant and Auditors in sight

The raid on international consulting firm Capvision Partners, based in New York and Shanghai, is the latest raid officially carried out by Chinese police on national security grounds. In March, five Chinese employees were arrested at the US accounting firm Mintz in Beijing. In April, Chinese police raided US consulting firm Bain & Co. in Shanghai and confiscated computers and phones.

The Chinese authorities are primarily focusing on consulting and auditing firms, i.e. companies whose work involves asking many questions, auditing companies and compiling information about the Chinese market, politics and the economy.

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state television speaks of information theft

Chinese state broadcaster CCTV reported that foreign institutions used domestic consulting firms to steal state secrets and information in key areas. Wang Wenbin, a spokesman for China’s Foreign Ministry, justified the Chinese authorities’ crackdown on the companies.

“What I would like to say to everyone is that the national security authorities and the relevant departments have recently taken public and lawful action against the companies in question,” the spokesman said. “It aims to promote the healthy development of related industries and protect the interests of national security and development.”

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Expanded Espionage Law

But despite the assurances from the Chinese Ministry of Foreign Affairs, other countries’ chambers of commerce and the EU ambassador to China are also concerned. Observers point out that there is no rule of law in China.

China recently tightened national security laws. On July 1st, an expanded anti-espionage law comes into force. Foreigners could also fear future consequences.

Several foreigners have already been arrested in China on espionage charges, including a senior executive at a Japanese pharmaceutical company in March. Trials following such allegations usually take place behind closed doors.

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