Blackrock prohibits employees from using...in China, know why US companies are struggling to operate in China

After US’ increased scrutiny over operations in China, BlackRock, has tightened rules over use of company-issued devices in China. The world's largest asset manager has imposed fresh restrictions on these devices for employees traveling to China, under which they will need to use temporary loaner phones and are prohibited to take company laptops there for business trips, say Bloomberg News and Reuters reports. The information was shared by the financial giant as part of its “policy enhancement” in an internal memo effective July 16, prohibiting the use of BlackRock-issued iPhones, iPads, laptops, and remote access via virtual private networks (VPN) during their visit to China. Even if the employees travel to China in their personal capacity, they will not be able to access the company’s network, Bloomberg reported.

The move signals towards an increasing tension surrounding business operations in China burdened by the geopolitical tensions between Washington and Beijing which have constantly severed global business connections. These restrictions came as a ripple effect of significant events which saw US’ business executives being stopped from leaving China. As a recent example, after one of its senior trade financing bankers, Chenyue Mao, was prevented from leaving the Asian giant, Wells Fargo cancelled all travels to China last week. China’s foreign ministry described the situation as a criminal matter. Earlier in July, even more recently, China blocked a US Patent and Trademark Office employee from exiting while he was on a personal visit. More concerning is that for many months a US Commerce Department worker has been facing issues in leaving China.

China strongly implemented data security laws in 2021, after which global financial firms have face several issues in fulfilling operational needs along with compliance requirements. Various banks and asset managers have built data centers within the country to keep Chinese information from going out, but this adds to massive costs and complicates business management.

BlackRock has huge operations in China with their wholly owned mutual fund company and a wealth management partnership with China Construction Bank Corp. The company's updated travel policy highlights the growing hurdles that global financial institutions face in navigating a increasingly intricate landscape of regulations and security concerns, particularly between the world's top two economies.