August 4, 2021

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Chinese legislation threatens U.S. firms accomplishing small business in Hong Kong, federal companies warn

2 min read

4 risks: The threats slide into 4 categories, the Departments of State, Treasury, Commerce and Homeland Protection warned in the advisory. They include things like organization challenges from the law, like the risk of arrest or sanction by Chinese authorities, information privateness and surveillance challenges from federal government, transparency concerns and access to business enterprise information and facts, and probable get in touch with with persons and entities sanctioned by the U.S. authorities.

Big market: The potential impacts are enormous. U.S. direct financial investment in Hong Kong totaled $82 billion in 2019, approaching the quantity invested in all of mainland China, which came in at $116 billion that calendar year.

Wide warning: The warning is the Biden administration’s latest caution for enterprises running in China. It arrives just days after the four companies, joined by the Office of the U.S. Trade Consultant and the Labor Division, issued a comparable advisory warning that American companies running in the China’s northwestern Xinjiang region may possibly be in violation of U.S. human legal rights and forced labor laws.

What’s next: Not like the Xinjiang doc, the Hong Kong warning does not explicitly recommend U.S. providers to minimize ties with the market place. But it does alert that U.S. firms may perhaps deal with “heightened possibility and uncertainty” in sanctions compliance, like obtaining to select concerning adhering to U.S. sanctions and complying with Chinese legislation in Hong Kong. If they decide on the latter, corporations can be exposed to “civil and legal penalties underneath U.S. legislation.”

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