Why China Is Raiding Foreign Companies At Dawn
AP Photo/Greg Baker, Pool
Multinational corporations with Chinese outposts have become increasingly aware that the Chinese government will investigate them for corruption - sometimes during unnanounced early-morning raids.
It's possible China's president, Xi Jinping, is cracking down on foreign firms intentionally to favor domestic competitors, as David Blumenthal has written in Foreign Policy. The theory goes that China can increase the odds that its own businesses will succeed in the global market if it can centralize political and economic power and make it more difficult for foreign businessmen to compete.
"The [Chinese] economy is moving away from an export model to domestic consumption and foreign companies don't have the same role they used to have," Jeremy Gordon, a consultant, told Forbes last year.
Dawn raids of foreign firms' offices are common during corruption investigations, corporate attorney Nathaniel Edmonds told Business Insider. Officials from China's Administration of Industry and Commerce (AIC) show up unannounced and search desk drawers, computers, files, lockers, safes, and even vehicles for documentation that could support a corruption investigation - and incriminate the firm, as Reuters has written.
"Companies need to be prepared with relevant dawn raid procedures to ensure that local Chinese offices are not unnecessarily turning over sensitive materials that could put the entire company at risk," says Edmonds, former Assistant Chief of the Foreign Corrupt Practices Act Unit of the Fraud Section in the Department of Justice.
Multinationals have hired lawyers to provide them with "dawn raid training" - seminars, courses, and coaching designed to prepare employees for intense questioning. Employees are also trained in Chinese cultural niceties, such as offering investigators tea or food to demonstrate cooperation, Reuters reported.
Carlos Barria/Reuters
Whereas senior executives of foreign firms were once given VIP treatment in China, they are now being subjected to prolonged questioning by Chinese investigators.
"There are concerns about the lack of transparency and length of time people are being held for questioning," Edmonds said. "There is a hope for a minimum level of transparency [in China], which hasn't always been present."
- US buys 81 Soviet-era combat aircraft from Russia's ally costing on average less than $20,000 each, report says
- 2 states where home prices are falling because there are too many houses and not enough buyers
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- 9 health benefits of drinking sugarcane juice in summer
- 10 benefits of incorporating almond oil into your daily diet
- From heart health to detoxification: 10 reasons to eat beetroot
- Why did a NASA spacecraft suddenly start talking gibberish after more than 45 years of operation? What fixed it?
- ICICI Bank shares climb nearly 5% after Q4 earnings; mcap soars by ₹36,555.4 crore
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market