Chinese Public Security Police have raided GroupM’s office in Shanghai yesterday, and have allegedly detained a number of former employees and questioned a senior executive, Campaign Asia-Pacific has learned. The employees were understood to be questioned in the lead up to, and at the raid.
According to multiple sources familiar with the situation, Yao Lan, GroupM China’s ex-head of Data Centre was detained several weeks ago, followed more recently by chief investment officer for China, Rycan Di, and Diana Hong, ex-general manager for GroupM China. As of yesterday morning, GroupM China’s CEO and country managing director, Patrick Xu, was also understood to be questioned during the raids, in accordance with sources and other major media outlets.
It is unclear if either of the alleged parties have been released from detainment at this stage, though Campaign Asia-Pacific has learned that Yao and Hong were already former employees of GroupM/WPP China at the time of their questioning. Xu and Di remain with the company as of now.
Campaign Asia-Pacific reached out to GroupM China to corroborate on the news of the detainment; however, the company has declined to comment. We have also reached out to Shanghai Police for confirmation.
The above are said to be allegedly investigated in regards to possible media broker activities—specifically in relation to how rebates are distributed to agencies and their employees. This involves the possible use of client funds that have not been disclosed to either the clients or tax authorities, according to Campaign Asia-Pacific sources familiar with the situation.
The issue of rebate management is not new to China. Ongoing for over a decade, the World Federation of Advertisers named China as the largest recipient of media rebates in Asia-Pacific in 2012, and pushed for transparency across its trading landscape.
Chinese officials have been cracking down on international companies with fines and raids, creating an uncertain and volatile operating environment. In April 2023, global consulting firm Bain & Co. was raided, with authorities visiting their Shanghai office to question its employees and allegedly seized computers and technology equipment. Bain released a statement saying they were co-operating with Chinese officials, but declined to comment further on the matter at the time, according to the New York Times.
Similarly, less than a month earlier, five Chinese nationals from American consulting company Mintz were also detained overnight in Beijing on suspicions of unlawful operations, before being released. In May 2023, the Shanghai-headquartered Capvision Partners were also raided across multiple offices of the international consultancy in Shanghai, Beijing, Suzhou, and Shenzhen. According to reports by Consultancy.Asia, the raids were revealed in a report from China’s state broadcaster CCTV to be part of a national, multiagency police operation. They featured clips of a brigade of police entering Capvision’s Shanghai office. They alleged that the firm had provided foreign entities with sensitive information on the defence and advanced technology sectors, including what they called “state secrets and intelligence.”
As more and more international companies navigate through China’s intelligence and data privacy laws, experts are speculating that foreign investment in the Chinese market (the world’s second-largest economy) will waver.
More to come as this story develops.
*Note: This article has been updated for accuracy purposes as of 21 October 2023, 8:53pm SGT. Shawn Lim has substantially contributed to this report.
