Bain & Company: Chinese police are questioning employees at the American consulting firm’s Shanghai office

Hong Kong (CNN) Chinese police have questioned employees at the Shanghai offices of Bain & Company, the US consultancy said on Thursday, in a development that insiders say has alarmed the wider US business community in China.

The news was confirmed a month after Chinese authorities closed the Beijing offices of Mintz Group, a US due diligence firm, and arrested five of its local employees.

The cases coincide with an increase in tensions between the United States and China, which has damaged the confidence of American business people working in the world̵[ads1]7;s second-largest economy.

Few details were known about the Bain case, including the reason for the visit, the status of employees questioned or their nationalities.

“We can confirm that Chinese authorities have questioned employees in our Shanghai office,” Bain said in a statement to CNN, without confirming when they were questioned.

“We are cooperating as appropriate with the Chinese authorities. At this time, we have no further comment,” the statement added.

Several phone calls from CNN to the police in Shanghai went unanswered. The American Chamber of Commerce in Shanghai did not immediately respond to a request for comment.

Michael Hart, the Beijing-based president of AmCham China, told CNN that the news had had a chilling effect on American businesses in China.

“Our business community is alarmed,” he said in written comments. “The Chinese government has continually said it welcomes foreign investment. However, a series of recent actions taken against American companies in China have sent the opposite message.”

With the latest news, “our members are asking, ‘Who’s next?'” Hart said. “Regardless of the government’s intention, that is the message being received.”

News of the police visit was previously reported by the Financial Times, which said on Wednesday that authorities had turned up at Bain’s office around two weeks ago.

Police seized some computers and phones, although they did not arrest any employees, according to the FT, which cited unidentified sources.

Mintz said last month that it had received no official legal notice of the case against the company and called on authorities to release the employees.

The New York-based firm added that it was licensed to conduct legal business in China and had “always operated transparently, ethically and in accordance with applicable laws and regulations.”

The investigation continues

Days later, however, a spokesperson for the Chinese Foreign Ministry said Mintz was “suspected of illegal business operations.”

“Further investigation is underway,” Mao Ning, the spokesman, told a news briefing.

Mintz did not immediately respond Thursday to a request for an update.

The last few weeks have Microns (MICR)the American chip maker, has also faced scrutiny from Chinese authorities.

China’s technology regulator launched a cyber security probe into the company last month, saying it would review its products to safeguard supply chains and look for any “hidden product problems”.

The move was seen as a potential attempt to retaliate after US allies such as Japan moved to restrict exports of advanced chipmaking equipment to China. It also comes amid a strained relationship between the US and China.

On Wednesday, AmCham China said in a white paper that respondents to an annual business climate survey had cited deteriorating relations between the US and China as their biggest challenge.

In a separate, smaller survey conducted this month, 68% of companies surveyed also cited bilateral tensions and other geopolitical risks as the most important considerations for expats when deciding whether to move to China for work.

More than a fifth of the 109 respondents to that survey said foreign workers refused assignments in China.

CNN’s Beijing bureau and Juliana Liu contributed to this report.

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