Louis Lehot Discusses U.S. House Committee’s Scrutiny of Venture Capital Investments in China

Foley & Lardner LLP partner Louis Lehot is quoted in the Foreign Investment Watch article, “Four venture capital firms receive letters from China Select Committee,” discussing a recent letter issued by the House Select Committee on the Chinese Community Party to four venture capital firms requesting information about their investments in the country’s emerging technology companies.

“Unfortunately,” Lehot explained, “one of the few things that both political parties agree on is restricting the flow of U.S. capital into China, and for anyone paying attention to this space, the investigations should not come as a surprise.”

“We have been telling U.S. corporations, investment funds and other investing entities with significant operations or investments in China to prepare themselves for a news article, an investigation or new regulation,” Lehot said.

Lehot offered his recommendations for firms to be prepared, chiefly that they conduct a review of Chinese assets and exposure, identify high risk positions in businesses, particularly those requiring U.S. capital or technology transfer or those with ties to the Chinese military, and establishing contingency plans for how to address and communicate about those higher risk positions.