by Jake Smith
A number of blacklisted Chinese companies have reportedly disguised themselves as American to operate inside the U.S. and evade penalties, The Wall Street Journal reported Wednesday.
The U.S. government has taken several steps to crack down on Chinese firms that have been linked to the Chinese Communist Party and identified as potential threats to national security. But companies of concern, including Hesai Group, SZ DJI Technologies, BGI Group, Huawaei and ByteDance have operated or worked with American-based companies to sell products and services inside the U.S. without penalty, according to the WSJ.
“Chinese firms take a blow but then adjust business strategy and are able to move in another direction,” Derek Scissors, former commissioner of the U.S.-China Economic and Security Review Commission, told the WSJ.
American Lidar, an auto technology company, registered in Michigan in December 2023 without declaring that its parent company was the Chinese-based Hesai Group, according to the WSJ. Hesai Group has prompted concerns from the intelligence community that its lidar technology — laser sensors that create a three-dimensional map of their environment — could be used to collect American data for Beijing.
One month after American Lidar registered to build a manufacturing plant in Michigan, the Department of Defense (DOD) blacklisted Hesai as a Chinese military entity operating in the U.S., immediately sending the company’s stock plummeting, according to the WSJ. Hesai blames its stock decline, which has never fully recovered, on the DOD’s decision to blacklist.
Hesai argues that its lidar technology cannot be used for surveillance purposes because it doesn’t save or transfer data, according to the WSJ. The plans to build a plant in Michigan have ground to a halt; a Hesai spokesperson told the WSJ that “American Lidar” was a proxy name to ensure consumers knew that its products were made solely in the U.S.
Hesai sued the DOD in May on claims that the department had no grounds to label it as a Chinese military entity or an affiliate of the CCP.
The DOD also added BGI Genomics, a healthcare subsidiary of the China-based BGI Group, to its Chinese military blacklist in 2022. Similar to Hesai, BGI Genomics claims that it does not have access to its American clients’ private data or ties with the Chinese military or government.
In 2023, one of BGI Genomics’ subsidiaries in Massachusetts — BGI Americas — rebranded itself as Innomics, according to the WSJ. Several federal lawmakers said in April that Innomics was attempting to “avoid regulatory scrutiny” in changing its name and urged the DOD to add the company to its blacklist, alongside BGI Genomics.
Congress is currently weighing new legislation to ban Chinese drone manufacturer DJI completely inside the U.S., warning that the company could be storing data and passing it off to Beijing, according to the WSJ. DJI denies the allegations, despite prior investigations pointing to the drone maker receiving funding from the CCP, and the company’s involvement in surveilling persecuted religious ethnic minorities in the Xinjiang province of China.
DJI made a deal in 2023 to continue selling its technology with Randall Warnas, an American citizen who previously worked for the company and Autel Robotics, a separate Chinese drone company, according to the WSJ. DJI granted technology licenses for at least two of its drone models to Warnas so that they could be sold in the U.S. through a startup company, Anzu Robotics.
Warnas told the WSJ that Anzu Robotics only stores data inside the U.S., not Beijing.
“The whole intention was to comply with the United States’ request to not have Chinese drones operating in the U.S.,” he told the WSJ.
Still, some lawmakers are concerned that DJI is leveraging the deal to stay inside the U.S., with Rep. Elise Stefanik, who helped spearhead the legislation to ban DJI, calling it a “desperate attempt” to evade sanctions, according to the WSJ.
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Jake Smith is a reporter at Daily Caller News Foundation.
Photo “Hesai Headquarters” by Hesai.
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