Chinese authorities question Bain & Company staff in Shanghai

04 May 2023 Consultancy.uk

Police in China have questioned Bain & Company staff, though the subject of the talks are still only subject to speculation. The police had previously also confiscated computers and phones from the MBB giant’s Shanghai office.

In mid-April 2023, media reports suggested that China’s police had made an unannounced visit to Bain & Company's office in Shanghai. On that occasion, officers were understood to have removed computers and phones from the firm’s office in the Chinese financial hub.

Two weeks later, police visited the Shanghai office once again, to question employees. According to a spokesperson at Bain, the firm is “cooperating as appropriate with the Chinese authorities”.

Chinese authorities question Bain & Company staff in Shanghai

A statement from Bain added, “We can confirm that the Chinese authorities have questioned staff in our Shanghai office. At this time, we have no further comment.”

It remains unclear why the police attended Bain’s office on either occasion – and whether the matter directly related to Bain, or one of its many clients. A one of the three largest strategy firms in the world – alongside McKinsey & Company and Boston Consulting Group – Bain provides advice to public, private, and non-profit organisations.

The Boston-headquartered firm's Shanghai office was opened in the city's central business district in 2004, and it hosts offices in Beijing and Hong Kong, which are not reported to have been probed.

Without further comment from Bain, or Chinese authorities, the context of the investigation is currently only a matter of speculation. While many press outlets have been swift to link the incident to ‘worsening relations between Washington and Beijing’, the story could just as easily relate to the police investigating issues at a domestic business. This has not prevented business leaders in the region issuing statements, though.

Speaking to the BBC, Michael Hart, president of American Chamber of Commerce in China told the BBC, "The Chinese government has continuously said it welcomes foreign investment. However, a flurry of recent actions taken against US enterprises in China has sent the opposite message. Our business community is spooked, and our members are asking, 'Who's next?' Irrespective of the government's intention, that's the message being received.”

As the US and China have escalated rhetoric around a trade war, the professional services community has certainly found itself at the heart of the action. In February, for example, China’s Ministry of Finance reportedly asked state-owned enterprises to stop relying on the Big Four for their audit needs. It would only be speculation to tar every interaction Chinese authorities have with US firms with that same brush, though. China’s regulators still also have a responsibility to investigate potential issues, whether or not doing so ‘spooks’ US-based investors.

In March, for example, Big Four professional services firm Deloitte also found itself under scrutiny from authorities in China. The firm was slapped with a 211.9 million yuan fine for reportedly failing to adequately assess the asset quality of China Huarong Asset Management. Deloitte was also barred from operating in Beijing for three months, due to the findings of China’s finance ministry.

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