Blacklisted Chinese companies are rebranding to evade US crackdown: WSJ
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The news: A slew of Chinese firms tagged as military entities are using new names and licensing arrangements to protect their business in the US, according to the Wall Street Journal.
The context: By setting up a subsidiary or affiliate, Chinese companies facing regulatory or reputational problems in the US are increasingly rebranding and creating US domiciled businesses to continue selling their products in the Western nation.
The Biden administration is ratcheting up restrictions on Chinese business in the US, building sizeable blacklists not only for national security reasons, but also to protect and create opportunities for US entrepreneurs.
A House of Representatives aide researching Chinese companies in the US told the WSJ: “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”
While the actions being taken to shift production, rebrand as American or set up subsidiaries with new names are legal, the trend is increasingly gaining the attention of regulators who can’t enforce laws when the ultimate owner or operator is unclear.
A proposed ban in US Congress for Chinese drone maker DJI is currently pulling the practice into the spotlight, as it seeks to stop a US citizen from licensing DJI technology to sell in the US through a US startup. Some lawmakers argue that DJI is using the process to get around sanctions. Rep. Elise Stefanik, an architect of the bill to ban DJI drones, called it a “desperate attempt” and that “DJI and all of its shell companies will be held accountable.”
The source: Wall Street Journal
