By Anna Lehman-Ludwig
As concerns have grown in recent years about the economic, national security, and human rights risks posed by Chinese technology firms, the United States has responded by banning or restricting the way many Chinese firms can operate in the country. Around the world, other governments are taking similar measures, citing security risks due to these companies’ alleged ties to the Chinese Communist Party (CCP). Many Chinese firms, like Hikvision, Huawei, and TikTok, have pushed back on these measures, asserting their independence from the Chinese government. However, questions remain about how susceptible these companies are to Chinese influence, and how countries can evaluate these risks to calibrate their policy measures according to the actual dangers posed to citizens and their data. In making this risk calculation, one of the most important questions regards the corporate governance structure of Chinese firms.
An illustrative example of a Chinese firm whose corporate governance raises significant concerns about Chinese influence is Hikvision. The Hangzhou-based Hikvision is the world’s leading video surveillance equipment supplier, with revenue of over $7 billion in 2018. The United States has raised a number of concerns about the security risks posed by Hikvision, however, and has leveraged a number of restrictions against the company in recent years.
One of the most powerful policy tools the United States has to act against Chinese firms it deems risky is to add them to the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) Entity List – making these companies subject to specific licensing requirements for exports. Companies on BIS’ Entity List “have been determined by the U.S. Government to be acting contrary to the foreign policy interests of the United States.” In October 2019, Hikvision was added to the entity list amidst growing concerns that the Chinese government would be able to use Hikvision technology to spy on or collect data from individuals outside of China. Western leaders have expressed concern over Article 7 of the Chinese National Intelligence Law which reads, “Any organization or citizen shall support, assist, and cooperate with state intelligence work in accordance with the law.” In calling for limits on Chinese tech companies’ presence in the U.S. and other Western countries, policymakers often cite Article 7 and raise concerns over companies’ limited ability to resist requests for information from the CCP.
Hikvision has not been allowed to sell its products to U.S. government agencies since August 2019, and the White House is in the process of finalizing a federal contractor ban for Hikvision and four other companies. Given Hikvision’s deep-seated integration with the CCP, the recent scrutiny is n
