In recent years, China has intensified its scrutiny of foreign businesses operating within its borders, particularly in the tech industry. Now, a new crackdown on the consulting industry is raising alarm among foreign executives.
In early May 2023, Chinese authorities arrested a number of consultants, including several from foreign companies such as McKinsey & Company, for allegedly “interfering in China’s internal affairs” and “endangering national security.” The consultants were accused of providing advice to Chinese companies on how to navigate trade tensions with the United States, among other things.
The arrests have sent shockwaves through the business community, with many executives now fearing that they too could be targeted. The situation is particularly concerning for foreign consultants, who work closely with Chinese companies and may be seen as having more influence than other foreigners.
The crackdown on consulting firms comes amid a wider push by the Chinese government to assert greater control over its economy and reduce its reliance on foreign technology. Last year, Beijing introduced a new law that requires foreign companies to undergo a national security review before they can do business in China.
The law, along with other measures, has led to increased scrutiny of foreign businesses, particularly those in the tech industry. In recent months, several high-profile companies, including Alibaba and Tencent, have come under investigation by Chinese regulators.
Foreign executives say the increased scrutiny is making it harder to do business in China, and is causing many companies to reconsider their operations in the country. Some are even considering relocating to other countries, such as Singapore or Hong Kong, which offer more favorable business environments.
Despite the challenges, however, many companies remain committed to the Chinese market, which is still seen as a key growth area for many industries. Some analysts say the recent crackdown may even create opportunities for companies that are able to navigate the changing regulatory environment.
For now, however, the situation remains uncertain, and foreign businesses operating in China are likely to face continued challenges and uncertainty as Beijing continues to assert greater control over its economy.