Business law

American companies in China suffer from raids, slow deal approvals and anti-espionage law


WASHINGTON, Aug 29 (Reuters) – U.S. companies have complained to them that China has become “uninvestable,” Commerce Secretary Gina Raimondo said on Tuesday, referring to fines, raids and other measures that make doing business in the world’s second-largest country risky. . The largest economy.

Here are details of some of the biggest hurdles to doing business in China in recent years.

Raids and fines:

Chinese authorities raided the Mintz Group’s Beijing office in March and detained all five local employees, in what turned out to be the start of a sweeping crackdown on advisory and due diligence firms, including Bain & Co’s Shanghai office and Capvision Partners.

The Beijing Municipal Bureau of Statistics later confiscated 5.34 million yuan of “illegal proceeds” to Mintz and imposed an administrative penalty of a similar amount, resulting in a total fine of about $1.5 million.

The agency said the company conducted “statistical investigations related to foreigners” without seeking and obtaining approvals. Mintz said she was ready to work with the Chinese authorities “to resolve any misunderstandings that may have led to these events.”

Exit ban:

China is increasingly banning people from leaving the country, including foreign executives. Reuters Analyze logs related to exit bansData from China’s Supreme Court shows an eight-fold increase in cases citing bans between 2016 and 2022.

Slow regulatory approvals:

Earlier in August, Intel announced (INTC.O) The company has canceled a $5.4 billion deal to buy the tower of Israeli chip maker Semiconductor Ltd (TSEM.TA) After their merger agreement expired without obtaining regulatory approval from China.

Last year, DuPont De Nemours Inc (D.N.) Electronic materials maker Rogers Corp. has canceled a $5.2 billion deal (ROG.N) After delays in obtaining approval from Chinese regulators.

Anti-espionage law:

Chinese lawmakers approved a sweeping update to Beijing’s anti-espionage legislation in April, banning the transmission of any national security information and broadening the definition of espionage.

The law, which took effect in July, has alarmed the United States, which has warned that foreign companies in China could be penalized for their regular business activities.

All “documents, data, materials and items related to security and national interests” shall enjoy the same protection as state secrets after revisions, according to the full text of the amended law released by Xinhua News Agency. The law does not specify what falls within China’s national security or interests.

Questions about due process:

Minister Raimundo said there was “no rationale” for the Chinese action against the chip maker Micron Technology (m.w), whose products were restricted by Beijing earlier this year. “There was limited legal action,” she said.

Chris Sanders Report. Editing by Jonathan Otis

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