Senator Seeks Crackdown on Chinese Firms That Use New Names to Evade US Sanctions

Sen. Rick Scott, R-Fla., urged the Biden administration last week to take action against Chinese companies that form U.S.-based subsidiaries to evade sanctions and other restrictions imposed by the U.S. government.

In a letter to Commerce Secretary Gina Raimondo and Treasury Secretary Janet Yellen, Scott said Chinese companies increasingly exploit “legal loopholes to rebrand themselves under new names” and avoid regulatory oversight. Such “deceptive” practices threaten U.S. national security and economic sovereignty, undermine U.S. regulations, mislead investors and business partners, and jeopardize the safety and privacy of American citizens, he said.

“It is imperative that we take decisive action to address these challenges,” Scott wrote. “We must strengthen our regulatory frameworks to ensure that companies attempting to rebrand or establish new subsidiaries are thoroughly vetted and held accountable.”

Among the companies cited by Scott is Hesai Group, which recently began using the name “American Lidar.” Scott said that “despite Hesai's attempts to distance itself from its Chinese origins,” its technology could be used for espionage or data collection.

The Defense Department in January added Hesai to its Section 1260H List of Chinese military companies (see 2402010018). But DOD reportedly later decided to remove Hesai from the list after government lawyers expressed concerns about whether the listing would hold up in court (see 2408130022).

Other companies that have engaged in such rebranding efforts include biotechnology firm BGI Group, electric vehicle battery producer CATL and drone manufacturer SZ DJI Technology, Scott said.

The lawmaker also called on the Biden administration to "take more expeditious action to add companies to our various entity lists, export controls, and capital markets sanctions list, to prevent Chinese military entities from exploiting our markets and compromising our national security." He said the administration's "lack of robust utilization" of these lists is "an unacceptable, self-imposed weakness in U.S. economic statecraft that must be remedied."

A Commerce spokesperson said the department has "received the letter and will respond through the appropriate channels." The Treasury Department and Hesai Group didn't respond to requests for comment.