FedEx’s China headaches are continuing.
Chinese authorities opened an investigation after Chinese telecom equipment giant Huawei said FedEx had diverted packages sent from its Japan offices to China, to the logistics company’s US headquarters instead. The diversion happened soon after the US in May placed restrictions on its companies’ dealings with Huawei, banning the Chinese firm from receiving components from American suppliers. The ban was later relaxed for three months.
FedEx apologized at the time, saying it had “mishandled” the packages and that there was no “external pressure” on the company.
China’s state-owned Xinhua news agency reported today (July 26) that authorities have concluded that FedEx’s categorization of the rerouting as “mishandling,” did not “match with the facts” (in Chinese). The report said the Chinese government also suspected the delivery giant of withholding over 100 Huawei-related shipments that were bound for China, without elaborating on the current whereabouts or contents of the parcels. FedEx’s actions may amount to a violation of laws according to China, Xinhua said, adding that the investigation will be continued.
“We have and will continue to fully cooperate with the Chinese authorities on the investigation and we are committed to full compliance with all applicable laws and regulations,” FedEx said in a statement. “These shipments in question were handled while we were trying to comply with the U.S. [Department of Commerce] order which was unclear and resulted in considerable complexity for our operations.”
The US delivery giant, as well as many of its peers, has been caught between the rising trade tensions between China and the US on a range of issues, with technology being one of the most heavily scrutinized areas. In June, FedEx sued the US government for violating its constitutional rights over having to unfairly “police the content of its packages in a manner it is not able to do” due to increasing US export bans on companies including Huawei.
The US commerce department placed Huawei on its “entity list” in May over national security concerns, the latest step in a long line of moves against the Chinese company. That effectively cut the company off from large parts of its supply chain. The company could get a reprieve—US president Donald Trump met this week with the heads of some of the country’s largest tech companies, such as Google and Intel, to discuss a range of economic issues including a possible resumption of sales to Huawei.
Despite that, FedEx still doesn’t seem to be off the hook in China. In addition to the Xinhua report today, China’s hawkish tabloid Global Times said in June that the company could be put on a list of China’s “Unreliable Entities List,” consisting of foreign firms or individuals that the country deems to have posed a national security risk to Chinese companies. The list has yet to be announced.
Update: This story was updated on the day of publication with a statement from FedEx.