From raids to travel bans: American companies face mounting obstacles in China

Commerce Secretary Gina Raimondo said on Tuesday that US companies have complained to her that China has become “uninvestable,” citing fines, raids and other measures that have made doing business in the world’s second-largest economy risky.

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

Raid and fines:

Chinese authorities raided the Mintz Group’s Beijing office in March and detained all five local employees in what appeared to be the start of a wide-ranging 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 fine of a similar amount, resulting in a total fine of about $1.5 million.

The agency said the company had conducted “statistical investigations involving foreigners” without seeking and obtaining consent. Mintz said she stands ready to work with the Chinese authorities “to remove any misunderstandings that may have led to these events.”

Travel Ban: China is increasingly preventing people from leaving the country, including foreign executives. A Reuters analysis of data on the travel ban from China’s Supreme Court database shows that the number of cases mentioning the ban increased eightfold between 2016 and 2022.

Slow regulatory approvals: Earlier in August, Intel Corp. canceled its $5.4 billion deal to buy Israeli chipmaker Semiconductor Ltd. Tower after the merger expired without regulatory approval in China.

Last year, DuPont De Nemours Inc canceled a $5.2 billion deal to buy electronic materials maker Rogers Corp after a delay in obtaining approval from Chinese regulatory authorities.

Anti-espionage law:

Chinese lawmakers in April approved a sweeping update of Beijing’s anti-espionage law, which bans the transmission of any national security information and expands 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 normal business activities.

All “documents, data, materials and items relating to national security and interests” will be under 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 justification” for China’s actions against chip maker Micron Technology, whose products Beijing imposed restrictions on earlier this year. “There was limited legal action,” she said.