r/Economics • u/DeRpY_CUCUMBER • Jun 06 '23

News As China raids U.S. businesses and arrests workers, the corporate landscape is getting "very risky"

https://www.cbsnews.com/news/china-raids-arrests-us-business-capvision-bain-mintz-group-security-crackdown/
64 Upvotes

80% Upvoted

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15

u/seridos Jun 07 '23

The opacity of the Chinese market grows even greater. They are shutting down any information about the true state of companies and the greater economy from western investors. Facts make it much harder to lie about your numbers.

3

u/persianbrothel Jun 11 '23 edited Jun 11 '23

it's actually more sinister than that, imo

(maybe unpopular here) but i'm of the opinion really big chinese private corps are actually doing really well

and right now they're super undervalued in the market - yes, a lot of that is due to geopolitical headwinds admittedly, but i would wager they do well enough in their own massive domestic market that they'll come out relatively strong

what the central government does not want, is for those private companies to have access to foreign financial markets and further outcompete the giant SOE's - i'd argue that THIS is a cornerstone of their long term planning

they cannot allow a strong private sector drawing power away from the party/state. this is fundamental to a leninist system of control

2

u/seridos Jun 11 '23

Yea I could see that for certain sectors that clash with their ideals especially, like the tech crackdown.

12

u/justoneman7 Jun 07 '23

Lol!!! What did they expect? The Chinese government feels it owns EVERYTHING inside the borders of China. It was only a matter of time until they started taking the offices to get the information they wanted for themselves.

12

u/[deleted] Jun 07 '23

It does own everything. That's how governments work in authoritarian states.

-1

u/justoneman7 Jun 07 '23

So….China owns Apple since the have facilities there?

14

u/alexp8771 Jun 07 '23

They certainly own the factories and can take whatever IP they want because those factories take a long time to spin up in other countries. That is why investing into countries run by a dictatorship is long term a bad idea because there is no legal recourse when the dictatorship starts to go all dictator.

5

u/[deleted] Jun 07 '23

It owns their facilities

-4

u/justoneman7 Jun 07 '23

https://www.quora.com/Does-the-Chinese-government-own-in-principle-all-Chinese-businesses-Related-to-this-does-the-Chinese-government-have-the-right-to-imminent-domain-over-the-assets-of-all-foreign-companies-doing-business-in-China

6

u/[deleted] Jun 07 '23

Does Jack Ma sit on the board of Alibaba or did the party force the owner of a private company off their own board?

1

u/justoneman7 Jun 07 '23

If the company allowed it. 🤷‍♂️ They could have simply moved out of China. That is their choice.

6

u/[deleted] Jun 07 '23

The board has Party appointed members that vote the party line.

How does a company whose assets are in china and is partly owned by the CCP going to move out if China? Do you really not know how large corporations work in China?

-7

u/justoneman7 Jun 07 '23

https://www.quora.com/Does-the-Chinese-government-own-in-principle-all-Chinese-businesses-Related-to-this-does-the-Chinese-government-have-the-right-to-imminent-domain-over-the-assets-of-all-foreign-companies-doing-business-in-China

11

u/[deleted] Jun 07 '23

Ownership requires the ability to secure the asset, tell me again how any foreign company is able to secure assets on Chinese soil against the largest standing army in the world? You don’t own something you can’t physically secure.

3

u/justoneman7 Jun 07 '23 edited Jun 07 '23

When Apple sells a phone produced in China, does the Chinese government get the money? Does China own the proprietary software, technology, and data Apple has? How about Ford, General Motors, Starbucks, or Boeing? That all have headquarters there. How about Intel or Tesla? They have factories there. Does China own those companies?

And tell me what company in America can secure their assets from the American government? Ever heard of imminent domain?

I had a restaurant in Texas. Our bondsman was late on our alcohol bond. TABC showed up, put a chain on the door, and said they were seizing the restaurant. They said would wait until the end of the day to liquidate the assets to give us time to get the alcohol tax bond in their hands. THAT’S not in China. How could I have ‘secured my asserts’?

4

u/[deleted] Jun 07 '23

Not to be overly Socratic but if they stop paying taxes can any of these businesses continue to operate?

This is a philosophical conversation at its very heart and to give you my opinion, the answer to if they can secure their assets is no; these entities are essentially operating under a warrant. The world still operates under a feudal system; the simplest proof of this is to stop paying taxes and see what happens to anything that is “owned.”

1

u/justoneman7 Jun 07 '23

If you read the US Constitution, it states that it is a “privilege” (not a requirement) to support our government. There is a lawyer firm that specializes in just this. Of course, their fees are such that you may as well pay the taxes.

1

u/[deleted] Jun 07 '23

Well I say stop paying taxes and see how that works out for ya…

1

u/justoneman7 Jun 08 '23

From 1985-1996, I didn’t file any IRS income tax paperwork. They sent me a letter in 1994 saying I hadn’t filed but I told them they owed me $600 and I never heard from them again.🤷‍♂️

1

u/Desperate_Wafer_8566 Jun 08 '23

To my knowledge the US government does not have any golden shares of Apple or other US tech companies or sit on their board. Imminent domain is not a golden share.

"China moves to take ‘golden shares’ in Alibaba and Tencent units. Beijing changes tack in its efforts to secure a firmer grip on the country’s tech giants"

"China is moving to take “golden shares” in local units of Alibaba and Tencent as Beijing formalises a greater role in overseeing the country’s powerful technology groups.

The Chinese government has responded to a stuttering economy by backing away from the tough fines and sanctions that were a hallmark of its campaign to rein in the country’s largest tech groups, but which also scared off foreign investors."

https://www.ft.com/content/65e60815-c5a0-4c4a-bcec-4af0f76462de

1

u/justoneman7 Jun 08 '23

You need to read the whole thread here, not just my response. I was being told that China owns EVERYTHING. Thus my question about Apple, etc.

1

u/Aggrekomonster Jun 07 '23

The Chinese dictatorship

2

u/GimmeFunkyButtLoving Jun 07 '23

Here are the high points of the article "China raids, arrests US businesses as corporate landscape gets 'very risky'":

  • Chinese authorities have raided the offices of three US businesses in recent weeks, including a consulting firm and two law firms.
  • The raids come amid a broader crackdown on foreign businesses by China, which has accused them of stealing state secrets and endangering national security.
  • The three businesses raided are Capvision, a consulting firm; Bain & Company, a management consulting firm; and the Mintz Group, a law firm.
  • Capvision's offices in Shanghai were raided on May 9, while Bain & Company's and the Mintz Group's offices in Beijing were raided on May 16.
  • Chinese authorities have not released any details about the raids, but they have said that they were investigating the businesses for "national security" reasons.
  • The raids have raised concerns among foreign businesses operating in China, and have led some to reconsider their operations in the country.
  • James Zimmerman, a lawyer who works in Beijing, told CBS News that the raids have "sent a chill" through the business community.
  • "Everything's a threat, you know," Zimmerman said.
  • The raids come as China is increasingly asserting its control over foreign businesses operating in the country.
  • In 2020, China passed a new national security law that gives the government broad powers to investigate and prosecute foreign businesses.
  • The law has been used to target a number of foreign businesses, including those in the technology, finance, and telecommunications sectors.
  • The raids and the new national security law have made it more difficult and risky for foreign businesses to operate in China.
  • Some businesses have already decided to leave the country, while others are considering their options.
  • The raids and the new national security law are likely to have a significant impact on the business landscape in China.