Foreign companies in China face growing scrutiny, pressure
BEIJING (AP) — Foreign companies are under growing pressure in China from anti-corruption, security and other investigations as President Xi Jinping’s government tightens control over business, clashing with efforts to lure back investors after the pandemic.
This week, Bain & Co said police questioned staff in its Shanghai office. The consulting company gave no details of what investigators were looking for. Last month, the corporate due diligence firm Mintz Group said its Beijing office was raided by police who detained five employees. Also last month, an employee of a Japanese drug maker was detained on spying charges and the government announced a security review of memory chip maker Micron Inc.
The ruling Communist Party is trying to reignite investor interest i n China despite increased political control over the economy. Business groups have said global companies are shifting investment plans to Southeast Asia, India and other economies.
“At a time when China is proactively trying to restore business confidence to attract foreign investment, the actions taken send a very mixed signal,” the European Union Chamber of Commerce in China said Friday in a statement.
A foreign ministry spokesperson said she didn’t know about the Bain & Co case but defended Chinese law enforcement.
“China welcomes foreign companies to invest and do business in China. We are committed to building an internationalised, market-oriented and law-based business environment,” said Mao Ning. “All companies in China should operate in compliance with law.”
Xi, China’s most powerful leader in decades, is in the midst of multiple campaigns to tighten ruling party control over entrepreneurs, root out official corruption and reduce reliance on foreign technology and expertise.
Also last month, the government announced Micron’s technology and manufacturing would be scrutinised for possible risks under China’s cybersecurity law. The company is a leading supplier to Chinese factories.
The crackdowns are a jarring backdrop for official efforts to reverse a decline in foreign business interest in China. The ruling party wants foreign companies in electric cars and other fields to bring in technology and provide competition to force Chinese companies to improve.
Business groups earlier said global companies were shifting investment plans to Southeast Asia, India and the United States due to the difficulty of visiting China, as well as higher costs and more cumbersome regulations.
At a forum in March with business leaders including Apple Inc CEO Tim Cook, the country’s top economic official, Premier Li Qiang, promised “broad space” for foreign competitors.