China Anti-Spy Law Hits Bain As Foreigner Crackdown Persists, 'F-ed By China' Analyst Says

Chinese authorities questioned and investigated employees at Bain & Company’s Shanghai office last week, in the latest crackdown of foreign businessmen in China. Bain, the global consulting firm headquartered in Boston, said that it is cooperating with Chinese authorities. 

Chinese police took Bain employees’ phones and computers, according to a report from the Financial Times. The investigation comes on the heels of a decision by China to expand its espionage laws, giving more power to the state to control data and information. 

Muddy Waters, an investment research firm, tweeted about the Shanghai raid of Bain & Company, saying, “As the old adage goes 'How did you get F-ed by China?' Two ways. Gradually, then suddenly.”

Also Read: Trio Of Ultra-Rare, Original Tesla Roadsters Discovered And Now On The Market – Potential Record-Breaking Values

Chinese and American business relations have been on shaky ground for more than a year now. Increased tensions between China and Taiwan have scared off many investors from Chinese names. 

U.S. legislators conducted congressional hearings to examine the possible security risks posed by TikTok, the widely-used social media platform owned by Chinese firm Bytedance. Lawmakers interrogated TikTok executives regarding whether the Chinese government is obtaining data collected by the app.

Chinese stocks have underperformed the overall market throughout the last year. Alibaba Group Holding’s BABA stock is down nearly 19% throughout the last year, while the S&P 500 SPDR Trust ETF SPY is down only 6%. 

Just a few weeks ago, some investors were optimistic about China’s government turning more business-friendly following news that Alibaba would be breaking up its business into different components, a sign that China would be open to more Alibaba IPOs down the road. Previously, China had shot down Alibaba’s planned IPO for the Ant Group, the company’s mobile payment platform. 

While there may be some brave investors out there taking a stab at some beaten-down Chinese names, the latest investigation of Bain & Co could be a sign that Chinese / American relations still have a ways to go. 

Now Read: When Jim Rickards Said China's Population Decline Would Result In 'An Epic Collapse'

Photo: Shutterstock