Chinese police questions Bain & Company staff in Shanghai

02 May 2023 Consultancy.asia 3 min. read
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The Shanghai office of global strategy consulting firm Bain & Company has been visited by Chinese police, who reportedly questioned some staff members on company dealings and engagements. Not much is known yet about the investigation or whether personal items like laptops or cell phones were confiscated.

“We are cooperating as appropriate with the Chinese authorities,” confirmed a Bain & Company spokesperson in comments to the BBC. The firm declined to provide any more information on the matter.

This is not the first time Chinese authorities have raided a US consultancy. In a previous incident on 24 March, police arrested five Chinese nationals working in the Beijing office of American due diligence consultancy Mintz Group, which has 18 offices globally. Authorities forced the closure of the office, as confirmed by the company in a statement.

Chinese police questions Bain & Company staff in Shanghai

The corporate practice of due diligence in particular is under fire in China. Though incredibly important to foreign investors hoping to gather insight into potential acquisitions, the practice is seen by authorities in China as akin to spying – or at the very least ‘snooping’, with corporate investigators often gaining access to information through surreptitious means.

In the case of Bain & Company, it is unclear when (or if) more information on this case may become available, as criminal investigations tend to be notoriously secretive in China.

Tension between the US and China

This incident is just the latest in a series of spats between US companies and Chinese authorities. It is seen as part of the recent increase in tensions between Beijing and Washington. US authorities have accused China of authoritarian practices, while for their part China accuses the US of sabotaging their economic prosperity and spying through US companies operating there.

Police scrutiny towards US consultancies operating abroad has not only come from Chinese authorities. In a separate incident in January, police in Portugal raided the offices of both Boston Consulting Group and PwC searching for documents as part of probe into a corruption case. Boston Consulting Group had also previously been raided in a separate corruption inquiry in 2017.

Visits from police to consulting firm offices are reportedly not wholly uncommon in China, but there is some fear that these most recent cases are part of a larger crackdown under the new anti-espionage law passed in China last month, which could open the door to authorities seizing sensitive corporate data more easily.

The breakdown of trust between the two countries was accelerated starting with the Trump administration’s so-called ‘trade war’ against China. It gradually got worse in recent years until reaching a crescendo in early February when US fighter jets shot down a Chinese spy balloon drifting over US territory. Though these recent spats are seen as a serious low point, the two super powers have already been locked in a fight for economic superiority for decades.