Chinese companies flagged for security concerns by US rebrand, change company names to avoid sanction

Posted by Admin May 29, 2024 Bussiness

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Chinese companies under investigation by the U.S. government are using shell companies, new names and other legal workarounds to continue doing business in America, according to a recent report.

“Chinese firms take a blow but then adjust business strategy and are able to move in another direction,” Derek Scissors, a former commissioner on the U.S.-China Economic and Security Review Commission, told The Wall Street Journal.

Hesai, which makes Lidar, a sensor technology, set up American Lidar as a manufacturing base in the U.S., the Journal reported. A month later, the Defense Department listed Hesai as a Chinese military company, which hurt the company’s stock price and prevented the U.S. military from buying its products.

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Chinese companies that are under investigation from the U.S. government are using shell companies and new names to continue doing business in America, according to a Wall Street Journal report. (Milos Bicanski/Getty Images | iStock / Getty Images)

A BGI Genomics subsidiary changed its name to Innomics after the Pentagon designated the parent company as a Chinese military entity.

Other Chinese companies rebrand to avoid U.S. government scrutiny.

“As the U.S. government turns to blacklists as a means of identifying problematic Chinese companies and as a means for imposing restrictions, the shell game is going to intensify,” a House of Representatives aide told the Journal.

Congress, meanwhile, is considering a broad limit on the use of drones from another Chinese company, SZ DJI.

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Representative Elise Stefanik speaking during a congressional hearing

“DJI and all of its shell companies will be held accountable,” said Rep. Elise Stefanik, who serves on the House Armed Services Committee and the House Permanent Select Committee on Intelligence. (Haiyun Jiang/Bloomberg via / Getty Images)

“DJI and all of its shell companies will be held accountable,” Rep. Elise Stefanik, who serves on the House Armed Services Committee and the House Permanent Select Committee on Intelligence, told the Journal.

But Scissors, a senior fellow at the American Enterprise Institute, told the Journal that it was more effective to target tech industries that are vulnerable to security breaches than to pick and choose individual companies.

“You should not be sanctioning individual firms, you should be sanctioning technology sectors,” Scissors said.

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DJI, American Lidar, Innomics and BGI Genomics did not respond to a request for comment from Fox News Digital.