More Raids in China Chill Due Diligence at Consulting Firms

​Recent raids in China are raising concerns among consultancies, as China steps up its security measures over what it perceives to be sensitive national intelligence. Capvision Partners, a consulting firm headquartered in New York City and Shanghai, is the most recent firm to be raided. This time, raids were conducted at several locations. We've gathered articles on the news from SHRM Online and other media outlets.

Raids in Several Offices

China's state security authorities raided multiple offices of Capvision. In Suzhou, employees were questioned and office devices searched. The nationwide operation simultaneously targeted the company's branches in Beijing, Shanghai and Shenzhen.

Capvision said on its official WeChat account it would "firmly implement national security development" and "take a leading role in regulating the consultancy industry."

(CNN)

West Accused of Stealing Intelligence Information

China's state broadcaster, CCTV, accused Western countries of stealing intelligence information in key industries, including defense, finance, energy and health, as part of a "strategy of containment and suppression against China." The broadcaster also blamed overseas institutions for joining domestic consulting companies to conceal their foreign backgrounds to evade Chinese laws.

The raids "will have a chilling effect," predicted Gerard DiPippo, a senior fellow at the Center for Strategic and International Studies in Washington, D.C.

(The New York Times)

Clarification Sought

China needs to be more transparent about law enforcement actions against companies such as Capvision that carry out the sort of due diligence firms need to make investment decisions, said Eric Zheng, president of the American Chamber of Commerce in Shanghai, in a press statement. "It would be helpful if the authorities would more clearly delineate the areas in which companies can or cannot conduct such due diligence," Zheng said. "This would give foreign companies more confidence and enable them to comply with Chinese regulations."

(ABC News)

Other Recent Raids

Other recent raids by Chinese authorities at U.S. firms include those at Bain & Co. in Shanghai and Mintz Group in Beijing. The episodes highlighted the risky environment for consulting firms in the world's second-largest economy.

(The Wall Street Journal and SHRM Online)

Pessimistic Business Climate

U.S. businesses operating in China are concerned about their prospects there, according to a survey by the American Chamber of Commerce in China. Two-thirds of respondents cited U.S.-China tensions as the top business challenge.

(BBC News and SHRM Online)