Investigation into AstraZeneca Employees in China Raises Concerns for Foreign Investors
Pharmaceutical giant AstraZeneca has confirmed that several of its employees in China are under investigation by Chinese authorities. The company released a statement acknowledging the investigation but provided no further details. Reports indicate that the employees were taken into custody for allegedly breaching China’s data law and importing medicine without approval.
This investigation comes as part of a larger trend of raids and arrests targeting foreign companies’ employees in China, which has raised concerns among foreign investors. In August, Japan’s Astellas Pharma revealed that one of its employees had been detained since March 2023 on suspicion of espionage and was subsequently indicted by Chinese prosecutors. Similarly, Chinese police raided the Beijing office of Mintz Group in May 2023 and detained five employees. The company was later fined $1.5 million for conducting unauthorized investigations. These incidents, along with others such as the raid on Capvision’s offices in multiple Chinese cities and the questioning of Bain & Co. employees, have created a chilling effect on foreign businesses operating in China.
The Chinese regime has been implementing stricter laws and regulations to tighten its control over information flows to the United States and other countries. These measures include requiring businesses to store data collected in China on local servers and prohibiting the transfer of information related to national security. In February, Beijing further expanded its state secrets law to include the concept of “work secrets,” which refers to non-state secrets that could have adverse effects if leaked. The recent implementation of new rules for data security under the updated state security law has heightened concerns among businesses, who fear being targeted for engaging in routine intelligence-gathering activities.
Foreign investors’ confidence in China’s economy has also been dwindling. In the second quarter of this year, record amounts of funds were pulled out of China, and foreign direct investment in the country plummeted to $14.8 billion. This decline in investment reflects growing apprehension about the business environment in China.
The investigation into AstraZeneca and the broader trend of targeting foreign companies’ employees in China highlight the challenges faced by multinational corporations operating in the country. These incidents underscore the need for businesses to carefully navigate China’s regulatory landscape and ensure compliance with local laws. As China continues to tighten its grip on data and information, foreign investors must weigh the risks against the potential benefits of doing business in the world’s second-largest economy.
