China Raids Offices of Business Consultancy Capvision
In Shanghai, China on May 9, 2023, a security camera is visible in front of an office building housing Capvision’s office.
As part of an ongoing campaign against foreign companies that supply sensitive economic data, China’s top foreign intelligence agency searched Capvision’s offices in Beijing and other Chinese cities.
As Xi Jinping’s government tightens control over industry and tries to woo back international investors when COVID-19 epidemic restrictions were relaxed, pressure on foreign corporations operating in China has increased, motivated mostly by national security concerns.
Along with additional places that the state media did not mention, investigators simultaneously visited Capvision operations in Beijing, Shanghai, and the southeastern manufacturing centers of Suzhou and Shenzhen.
Staff members were reportedly questioned by police, market regulatory agencies, and officers from the Ministry of State Security. Although the reports stated that investigations had been initiated into the corporation and “personnel involved in the case according to law,” there was no information on arrests or detentions.
No information was provided regarding the particular legal difficulties in question, and state media withheld the precise dates of the raids on Capvision, which has offices in Shanghai and New York.
According to state broadcaster CCTV, “Certain Western countries have become increasingly rampant in stealing intelligence and information pertaining to our country’s military industry, economy, and finance over the past few years in order to realize the strategy of containing and suppressing China.”
According to the research, domestic consulting firms are used to steal these secrets as instruments. According to the CCTV investigation, “some domestic consulting firms have a poor understanding of national security and seek to profit financially by dodging the law.”
In response to questions regarding recent steps taken against Capvision and other businesses, Wang Wenbin, a spokesperson for the Foreign Ministry, stated that China’s national security agencies and other “competent departments” have recently been conducting “open law enforcement on relevant enterprises in accordance with the law.”
Wang told reporters at a daily briefing on Tuesday that “this is a routine law enforcement action in accordance with Chinese law, aiming to promote the regulated and sound development of the industry and safeguard national security and development interests.” The representative made no additional comments.
According to the company’s website, Capvision is a “leading global expert network platform that excels at identifying the right advisors for specific business insights.” According to the business, it provides over 2,000 clients with services through more than 600 researchers and 450,000 industry professionals.
Eric Zheng, president of the American Chamber of Commerce in Shanghai, said in a press release that China has to be more open about law enforcement measures against businesses like Capvision that perform the kind of due diligence that businesses require to make investment decisions.
“It would be helpful if the authorities would more clearly delineate the areas in which companies can or cannot conduct such due diligence,” Zheng stated. “This would increase the confidence of foreign businesses and allow them to adhere to Chinese regulations.”
Although Capvision has not responded to the raids, on Monday it published a flier for National Security Education Day, which fell on April 15.
The brochure read, “Capvision is steadfastly devoted to the outlook on national security and is leading the industry in its healthy and orderly development. Capvision is a leading Chinese industry specializing in delivering information services.
The business is the most recent to be under investigation, allegedly for attempting to get information that would not be regarded as state secrets in other nations.
Consulting company Bain & Co. reported last month that authorities questioned employees in its Shanghai office. It supplied no information on what they were looking for. Prior to that, the corporate due diligence company Mintz Group reported that authorities had raided its Beijing headquarters and taken five employees into custody. The government revealed a security review of memory chip manufacturer Micron Inc., while another employee of a Japanese pharmaceutical company was held on spying allegations.
American firms are gravely concerned about a recent expansion of China’s anti-espionage statute, according to U.S. Ambassador Nicholas Burns, who stated last week that it may put them in danger of prosecution for merely gathering routine information about the Chinese economy and potential partners’ local enterprises.
Burns claimed that despite the fact that the private sector is thriving, major state-run businesses and financial institutions continue to dominate the world’s second-largest economy, leading many to postpone major investments until more information is available.
Even Nevertheless, several multinational corporations are transferring their investment priorities to Southeast Asia, India, and other economies because they are thought to have reduced political risks.
The probes, whether they are politically motivated or not, come at a time when China’s relations with Washington Europe, and Tokyo are strained over disagreements about human rights, Taiwan, security, and technology.
Xi, China’s most powerful leader in decades, is currently engaged in a number of programs to strengthen the Communist Party’s control over businesspeople, eradicate official corruption, and lessen the country’s reliance on foreign technology and knowledge. Executive travel to China is already difficult for foreign companies because of possible exit prohibitions, theft of trade secrets, and the Chinese government meddling in deal-making.
Authorities now have the ability to access electronic information thanks to changes to the espionage statute. The law is applicable to all “documents, data, materials, and items related to national security,” according to the official Xinhua News Agency. The definition of “national security” is still up for debate.
Employees from foreign businesses and government organizations have long been warned about bringing laptops or mobile phones to China that contain sensitive data to because they could be impounded by authorities or stolen by business espionage.
For official efforts to stem a downturn in international business interest in China, the crackdowns portray a sobering background. The ruling party wants foreign firms in electric vehicles and other industries to introduce technology and create competition to pressure Chinese firms to advance.