Foreign Companies and Employees Worried by Latest Chinese Probes

Foreign Companies and Employees Worried by Latest Chinese Probes

The Lede: A probe of Bain & Company is the latest in a series of actions taken by Chinese authorities on foreign companies and employees operating in China.

What We Know:

  • Chinese police have questioned the staff of U.S. consultancy Bain & Company at their Shanghai offices. The parties involved have not disclosed many details such as the reason for the visit, the status of employees who were questioned or their nationalities, and what questions the police asked.
  • This incident follows a string of other probes and detentions of foreign companies and employees in the month after Chinese Premier Li Quiang courted foreign companies and investment at the China Development Forum by promising openness and a bright future.

The Background: At the end of March, Chinese authorities launched a cybersecurity review of U.S. chipmaker Micron Technology. The office of U.S. corporate due diligence firm Mintz Group was also raided by Chinese authorities and five local staff were detained. Just days later, an employee of Japanese drugmaker Astellas Pharma was also detained for spying. China recently passed a counter-espionage law that expanded the list of activities that could be considered espionage.

Likely Outcomes:

  • Stricter anti-corruption and espionage laws suggest a trend of China cracking down on foreign companies and an increase in future investigations by Chinese law enforcement. This could lead companies, especially American companies and those aligned with the U.S., to reassess the risks of doing business in China, the manner of conducting operations, and the information that they choose to handle in the country. Many multinationals will likely reduce or withdraw their presence while employees and staff may increasingly turn down assignments in China. On the flip side, China may also seek business with non-Western countries as companies in developing economies see opportunities and deals in China.
  • Global investors are limiting inflows for fears of future performance in the midst of geopolitical tensions. Asia funds that have become overweight in China – having become overexposed amid the optimism during China's re-opening – are now cutting back investments. As U.S. measures against China tighten on international business and China continues to use the law against foreign companies and individuals doing business in the country, investors may look to other options to place their capital.


“Our business community is spooked. The Chinese government has continuously said it welcomes foreign investment. However, a flurry of recent actions taken against US enterprises in China has sent the opposite message.” – Michael Hart, president of the American Chamber of Commerce in Beijing

Good Reads:

Chinese police question staff at Bain’s Shanghai office (CNN)

Business 'spooked' as Bain & Co. probed in China (News24)