Chinese authorities have conducted a raid on the Shanghai offices of GroupM, a major ad agency. According to reports from Reuters and The Wall Street Journal, one current employee and two former employees have been arrested. The Financial Times stated that a senior advertising executive was among those detained for further questioning.
While the CEO of GroupM in China, Patrick Xu, was reportedly spoken to the police, he was not detained. The Shanghai police, in a statement on Chinese social media, accused three suspects of accepting large bribes during their time at the company.
When contacted Insider, GroupM declined to comment on the matter. The raid on the Shanghai campus of WPP, the conglomerate that owns GroupM, took place on Friday, as reported Reuters.
WPP is recognized as the world’s largest advertising company based on revenue, generating $16.9 billion in 2019. GroupM, a significant component of WPP’s operations, claims responsibility for $60 billion in annual media investment.
These recent events follow increased scrutiny on foreign businesses operating in China. In April, the investment firm Bain faced a crackdown with computer seizures and staff interrogations. Likewise, Mintz Group, an American corporate due diligence firm, had its Beijing offices raided Chinese authorities, resulting in the detention of five employees. The Beijing Municipal Bureau of Statistics subsequently fined Mintz Group $1.5 million for unauthorized “foreign-related statistical investigation activities.”
It remains to be seen how these developments will impact the operations and reputation of GroupM and WPP in China’s advertising industry.