China yesterday said that a raid by authorities on US consultancy Capvision Partners’ offices in the nation was aimed at safeguarding its “national security and development interests.”
“China’s national security agencies and relevant departments have recently carried out open law enforcement actions against the relevant company in accordance with the law,” Chinese Ministry of Foreign Affairs spokesman Wang Wenbin (汪文斌) said when asked about an investigation into the firm.
“This aims to promote healthy development of the industry, and safeguard national security and development interests,” he said.
Photo: Reuters
State broadcaster China Central Television on Monday said that authorities had launched an investigation into Capvision, a consulting firm based in the US.
The report said the probe was based on findings by Chinese authorities that the domestic operations of foreign consulting firms had been used by overseas institutions to obtain state secrets and other sensitive information.
Official media in eastern Jiangsu Province reported the investigation involved the raid of Capvision’s Suzhou office, as well as operations in Shanghai, Beijing and Shenzhen.
The company, set up by former Bain & Co consultants and Morgan Stanley investment bankers in Shanghai in 2006, specializes in putting experts in various industries in contact with firms and investors.
Its clients include banks, consultancies and Fortune 500 companies.
China has stepped up its scrutiny of foreign firms in the consulting and business research sector, detaining staff and closing the Beijing office of US-based due diligence firm Mintz Group in March.
Chinese authorities late last month questioned staff at Bain’s Shanghai office, the US consultancy giant said.
Bain, which provides strategy and management consulting services worldwide, said its employees had been questioned, but did not specify why.
The American Chamber of Commerce (AmCham) in Shanghai yesterday said that it was “concerned by recent reports about investigations of US companies in China that specialize in due diligence or consulting.”
“It would be helpful if the authorities would more clearly delineate the areas in which companies can or cannot conduct such due diligence,” AmCham Shanghai president Eric Zheng (鄭藝) said in an e-mailed statement, calling due diligence “essential to doing business in China.”
“This would give foreign companies more confidence and enable them to comply with Chinese regulations,” he said.
EU Ambassador to China Jorge Toledo Albinana also expressed concern about Chinese investigations into consultancies.
“The latest news on crackdowns on consultancies is not good news,” Albinana told reporters in Beijing yesterday.
Albinana said the beefed up cyberespionage law was “not very conducive” to China’s aim of opening up to more foreign investment.
China says it welcomes foreign investment as long as firms abide by its laws.
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