Chinese police question employees at Bain’s Shanghai office

Chinese police have visited the Shanghai offices of Bain & Company and questioned employees at the US management consulting group, in the latest case of heightened scrutiny of foreign businesses in China as tensions between Beijing and Washington rise.

Six people familiar with the situation said Chinese police had made a surprise visit two weeks ago. Police took away computers and phones but did not detain any team members, according to two people briefed on the incident.

Three of the people said police made more than one visit to the offices in the Chinese financial centre. The incident comes after authorities last month raided the Beijing office of US due diligence firm Mintz Group and detained five local staff.

It remains unclear why the police went to Bain and whether it was directly connected to the blue-chip consulting firm or to one of its clients.

Following publication of the FT story Bain confirmed that the police had visited its office.

“We can confirm that the Chinese authorities have questioned staff in our Shanghai office. We are co-operating as appropriate with the Chinese authorities,” it said. “At this time, we have no further comment.”

The US embassy in Beijing and the American Chamber of Commerce in Shanghai, a lobby group for about 1,500 US businesses, declined to comment.

Executives at consulting companies in China and other firms have been speculating in private about the incident since it occurred, according to several people.

The raid has particularly fuelled concern at American companies that were already worried about signs that Beijing may be stepping up retaliatory action because of measures taken against Chinese firms by the administration of Joe Biden.

US Treasury secretary Janet Yellen last week voiced concerns about what she described as “a recent uptick in coercive actions targeting US firms”.

In recent weeks China’s powerful internet regulator opened an investigation into Idaho-based memory chip manufacturer Micron Technology on national security grounds and detained a senior executive from Japan’s Astellas Pharma on espionage charges.

Chinese authorities also suspended Deloitte’s operations in Beijing for three months and hit the Big Four accounting firm with a record fine over deficiencies in past audits. The commerce ministry last week banned several Raytheon and Lockheed Martin executives from entering the country and prohibited Chinese groups from selling to the two US defence contractors.

At the same time, Beijing is rolling out the red carpet for some US businesses central to its future, such as Apple, raising concerns in Washington about its willingness to target some companies while wooing others.

Top Chinese officials including the new premier, Li Qiang, have been keen to portray the country as open for business to bring back foreign investment and help restart an economy battered by zero-Covid lockdowns.

Bain employs more than 200 people in China and its consultants have provided advice to a swath of Chinese companies from tech giant Alibaba to electric vehicle start-up Li Auto.

In Shanghai, the base for most of Bain’s China team, the group has developed a close relationship with senior officials via the International Business Leaders Advisory Council, a prestigious advisory group to the mayor of Shanghai.

Bain has been part of the group since 2008 and Orit Gadiesh, the consultancy’s chair, served a three-year term as IBLAC chair.

The consulting group’s partners are also regular commentators in Chinese state media, often giving bright predictions for the country’s economy.

Additional reporting by Edward White in Seoul, Joe Leahy and Sun Yu in Shanghai and Primrose Riordan in Hong Kong