Capvision, a Consulting Firm, is Raided by Chinese Authorities

China has targeted another global business consulting firm for national security reasons and has launched an investigation into Shanghai-based Capvision Partners as part of a broader crackdown on the industry, state media said. reported on Monday night.

State media said several of the company’s offices in China, including Shanghai, Beijing, Suzhou and Shenzhen, were raided and the company “failed to take seriously its responsibilities and obligations” to prevent espionage.

Capvision did not immediately respond to a request for comment.

On Monday night, the company said on its official account on Chinese social media and chat app WeChat that it would “firmly implement national security development” and “play a leading role” in regulating the consulting industry. .

The investigation is the latest in a recent government crackdown on consulting and advisory firms that serve foreign investors and companies seeking information about Chinese industries. Mintz Group, an American firm that specializes in corporate investigations, said in March that Chinese authorities had raided its offices, detained five Chinese staff members, and closed its branches. Last month, U.S. consulting firm Bain & Company said security personnel visited its offices and questioned employees.

Police told state-run Jiangsu Television that Capvision was in frequent contact with “secret-related officials” of the Communist Party of China and officials in sensitive areas such as defense and science. Authorities accused Capvision of hiring consulting experts “at high pay” to “illegally obtain various types of sensitive data,” posing “significant and hidden dangers to China’s national security.” will bring,” he said.

A separate report Monday by China’s state-run broadcaster CCTV said a multi-agency investigation led to the arrest of at least one employee of a state-owned company, who allegedly provided “state secrets and information” to foreigners in Capvision. He was sentenced to six years in prison for the crime. client.

It’s unclear when the Capvision raid took place or if it targeted companies other than Mintz and Bain.

Last month, China’s legislature issued a revised counter-espionage law that expands the definition of what may be construed as espionage to include sharing “documents, data, materials, or things related to national security and interests.” passed the law.

This marks a new effort by the Chinese government to limit the outflow of information deemed sensitive to foreign investors and the government. China is at odds with the United States over restrictions on microchip technology and growing fears of China’s control over the materials and components used to produce electric vehicles.

Capvision was founded in 2006 by former Bain consultants and Morgan Stanley investment bankers and is headquartered in New York and Shanghai, according to its website.

Following news of a raid on a consulting firm last month, the U.S. Chamber of Commerce warned of increased risks in doing business in China.

Gerald DiPippo senior researcher A former senior U.S. intelligence official at the Center for Strategic and International Studies said the raid was because what China gained by restricting classified information “doesn’t justify the reputational cost China is paying foreign companies.” described it as a “self-defeating strategy”. ”

Chinese multinationals are trying to determine whether the investigation was driven by national security concerns or in retaliation for the Biden administration’s trade restrictions on China, DiPippo said.

“These accounts are not mutually exclusive, but Capvision’s case adds more weight to the national security debate,” DiPippo said. “In that case, the action may not be arbitrary, but it has a chilling effect, especially on investors and local staff employed by US companies.”

Claire Who and Olivia Wang Contributed to research.

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