No notification of cutting ties with China SOEs: US consultancy

Leading US consultancies on Monday played down a media report claiming that their business cooperation with China's State-owned enterprises (SOEs) has been banned by the Chinese government due to spying concerns.

China has ordered SOEs to cut ties with US consulting companies such as McKinsey & Company and Boston Consulting Group (BCG) because of fears they are spying on behalf of the US government, the Financial Times (FT) reported Sunday, citing unnamed Chinese officials.

The FT reported the move indicates a further escalation of conflicts between China and the US in terms of information security, after the US indictment of five Chinese military officers for alleged cyber theft of US trade secrets.

"We haven't received any notification of this kind," US consultancy Strategy& said in a statement e-mailed to the Global Times Monday. "Serving our clients to help them build the capabilities they need to win in China and globally will continue to be our number one priority."

Press officers from other leading US consultancies such as McKinsey, Bain & Company and Accenture told the Global Times Monday that they are aware of the media report, but so far have no comment on this matter. BCG was unavailable to comment by press time.

Although these US consultancies declined to disclose information of their SOE clients, public information showed that they have provided consulting services to SOEs, including oil giant Sinopec and China Minmetals Corporation.

McKinsey said on its website that 30 percent of its clients in China are SOEs and the company also works with dozens of government agencies and institutions at various levels. Media reports also show Sinopec started cooperation with McKinsey in June 2013.

"We've not heard of the ban and need to further check. So far our cooperation with McKinsey is normal," a spokesperson with Sinopec, who did not give his name, told the Global Times Monday.

China's State-owned Assets Supervision and Administration Commission, which oversees 113 large SOEs, declined to comment on Monday.

Qin Gang, foreign ministry spokesperson, told a regular press briefing Monday he cannot confirm the FT report. He said while upholding the opening-up strategy, China requires foreign enterprises to abide by Chinese laws and regulations during their operation in the country. "[They] should not be engaged in activities jeopardizing China's safety and interests," he added.

"Foreign consultancies could not only acquire internal data from SOEs, but also know about their development strategies, potential mergers and acquisitions targets, and even country-level development plans," Wang Danqing, a partner at domestic consultancy ACME Management Consulting, told the Global Times Monday.

As SOEs concern the country's energy and information security, Wang said such a ban is not surprising. "As far as I know, China's military-related companies have already banned foreign consultancies," he noted. "An expansion of the ban will also provide an opportunity for domestic consultancies."