State media report suggests growing suspicions of firms involved in due diligence and business research industries
Helen Davidson in Taipei
Tue 9 May 2023 06.23 BST
Chinese authorities appear to be running a targeted espionage investigation of foreign consulting firms operating in the country, according to a state media report, after recent raids on the offices several international firms.
The latest known case saw officers raid multiple offices used by the business consulting firm Capvision in Shanghai, Beijing, Suzhou and Shenzhen, Chinese state media reported on Monday. It followed raids on Mintz Group in March, which saw five employees arrested and the branch shut down. US management consulting firm Bain & Company said its Shanghai office was visited by Chinese officers in April, and employees questioned.
A report on CCTV on Monday alleged Capvision, which was founded in China and has joint headquarters in New York and Shanghai, had paid employees of Chinese state-owned companies to leak secrets. It did not say when the raids took place, but reportedly said a multiagency investigation had seen one employee of a state-owned company jailed for six years for providing state secrets to Capvision’s overseas clients.
The report suggested there was growing suspicions of such firms, as well as domestic companies which work with the due diligence and business research industry. It said some consulting firms were ignoring national security risks in seeking market share and profit, and becoming “accomplices for overseas espionage, bribery, and extraction of national secrets and intelligence”.
“In recent years, some western countries have been implementing strategies to contain and suppress China, with increasing rampant activities to steal intelligence information in key areas such as military, military industry, economy, and finance,” it said, according to a translation by China analyst Bill Bishop.
“The national security authorities have investigated several special cases and found that many overseas organisations with complex backgrounds have stolen China’s national secrets and intelligence in key areas through domestic consulting firms and other industries. Some domestic consulting companies have a weak sense of national security, and in order to gain economic benefits, they frequently walk on the edge of the law.”
The EU is one of China’s biggest trading partners and sources of foreign investment. On Tuesday its ambassador to China said the crackdown on consultancies was “not good news”. The ambassador, Jorge Toledo Albinana, also said the expansion of the anti-espionage law could allow for actions which were “not very conducive” to China’s stated aims of further opening its economy to the global market and foreign investment.
Business consultancy and due diligence firms have long operated in China to provide research and background information to foreign companies wanting to do business in the country. But the raids, which come at the same time as a broadening of China’s anti-espionage laws, have sparked concern among foreign business operators in the country. Japanese firms in particular have expressed fears about continuing to work in China, with at least 17 nationals detained under the anti-espionage law since 2014.
The targeted firms have not responded to media queries, beyond a statement from Bain & Co last month saying it was cooperating with police. Capvision posted on its WeChat account that it would “firmly implement national security development”.
https://www.theguardian.com/world/2023/may/09/china-targets-foreign-consulting-companies-in-anti-spying-raids
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