Taiwanese Economic Minister Sheng Jong-chin has ordered an investigation into Chinese company Megvii Technology following its inclusion in a list of 28 Chinese entities that were blacklisted by the US government.
The investigation follows concerns surrounding Megvii’s recently acquired contract to provide a facial recognition security system at Taichung Power Plant in Taiwan. Megvii won the contract on September 12, less than one month before being added to the US list.
The blacklisted companies are implicated in human rights violations and abuses in China’s Xinjiang region. The US Commerce Department made the announcement on October 7, saying in a statement that the entities were implicated “in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups” in Xinjiang.
China has been detaining hundreds of thousands of ethnic Muslims in the northwest Xinjiang region for two-and-a-half years. Chinese officials deny the accusations, referring to the operations in Xinjiang as “voluntary de-radicalization camps” and “vocational training centers.”
Former detainees, however, describe them as closer to internment camps, and have made accusations of abuse, torture and forced political re-education under the threat of violence.
Megvii denies any wrongdoing, asserting that it complies with all laws in place in the regions where it operates. Their security contract with the Taichung Power Plant involves a system that uses facial recognition to monitor contractors working in the facility, however it excludes employees of the state-run Taiwan Power Company.
The blacklisting, which prevents US companies from selling products to flagged entities, could complicate Megvii’s planned IPO on the Hong Kong stock exchange, though it still plans to go through with it despite the implications against it. Being on the blacklist prevents Megvii from purchasing x86 servers and GPUs that are crucial to their services.
Reports indicate that Goldman Sachs is reviewing its involvement as a joint sponsor of Megvii’s IPO alongside JPMorgan Chase and Citigroup, though they still have the financial support of Chinese tech giant Alibaba, and are looking to raise up to $1 billion on the Hong Kong stock exchange.
October 17, 2019 – By Tony Bitzionis