Foreign Companies In China Face Growing Scrutiny, Pressure

Foreign companies are under growing pressure in China as President Xi Jinping’s government tightens control over business, clashing with efforts to lure back investors after the pandemic.

This week, Bain & Co. said police questioned staff in its Shanghai office. It gave no details of what they were looking for. Last month, the corporate due diligence firm Mintz Group said its Beijing office was raided by police who detained five employees.

Also last month, an employee of a Japanese drug maker was detained on spying charges and the government announced a security review of memory chip maker Micron Inc.

The actions run counter to efforts by the ruling Communist Party to reignite investor interest in China despite increased political control over the economy.

According to the European Union Chamber of Commerce in China said Friday in a statement, the actions taken send a very mixed signal At a time when China is proactively trying to restore business confidence to attract foreign investment.

Business groups have said global companies are shifting investment plans to Southeast Asia, India and other economies.

The investigations come at a time when China’s relations with Washington, Europe and Tokyo are strained by disputes about human rights, Taiwan, security and technology.

The ruling party has tightened legal restrictions on access to information about companies and their employees.

That has increased uncertainty for law or consulting firms including Bain & Co. and Mintz Group that help clients spot fraud or other misconduct by business partners or acquisition targets.

But there is no indication whether they were politically motivated. Chinese companies have been targeted for more severe action.