China Opens Investigation Into FedEx One Day After Announcing Unreliable Entity List

China opened an investigation into FedEx after it said the shipping company “failed to deliver” packages to certain addresses in China, state-media reported June 1. China suspects FedEx of “undermining the legitimate rights and interests of Chinese clients,” the report said, damaging the rights and interests of FedEx’s clients and violating industry laws.

China’s Vice Minister of Commerce Wang Shouwen on June 2 defended the country’s decision to investigate FedEx, calling the move “understandable” and stressed that all Chinese companies should be treated “without discrimination.”

Huawei Technologies, which was recently added to the Commerce Department’s Entity List, said the packages were intended for them, Reuters reported. Huawei said it is “reviewing its relationship” with FedEx after alleging the packages were intentionally diverted, Reuters said, but FedEx said the packages were misrouted by mistake. In a statement, FedEx said it “values” its business with China and Huawei and will cooperate with the investigation. “FedEx holds itself to a very high standard of service,” the company said.

FedEx needs to be investigated “in accordance with Chinese laws,” Wang said during a June 2 press conference, according to an unofficial translation. “All companies must abide by Chinese laws, respect Chinese laws, and operate within the framework of Chinese laws.”

The announcement of the investigation came just one day after China said it is creating an “unreliable entity list” for foreign companies who damage the interests of Chinese entities, a move that was widely viewed as a response to the U.S.’s Entity List and Commerce’s May 16 blacklisting of Huawei (see 1905310060). During the press conference, Wang repeated the vague wording from China’s original entity list announcement, saying the list is aimed at companies who violate “the market principle” and the “spirit of the contract.” Wang did not say whether FedEx would be added to the list.

During the same press conference -- which came after China released a "white paper" detailing its position on U.S.-China trade negotiations -- Guo Weimin, a spokesperson for China’s State Council information office, criticized the U.S. approach to trade negotiations and said it is “undermining” global trade. “The trade war has not brought so-called ‘re-greatness’ to the United States, raising the production costs of American enterprises, raising domestic prices, affecting U.S. economic growth and people's livelihood, and hindering U.S. exports to China,” Guo said, according to an unofficial translation.

In the white paper, China said U.S.-imposed tariffs on China have led to “barriers to U.S. exports to China.” China said Midwestern agricultural states were “hit particularly hard,” with agricultural exports to China decreasing by about 33 percent in 2018, the report said. U.S. “businesses are worried that they might lose the Chinese market,” China said, “which they have been cultivating for nearly 40 years.”