September 22, 2020

Volume X, Number 266

September 21, 2020

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President Trump Orders Chinese Entity to Divest Interests in U.S. IT Company

On March 6, 2020, President Trump ordered Beijing Shiji Information Technology Co., Ltd. and its direct subsidiary Shiji (Hong Kong) Ltd. (Shiji) to divest all interests in StayNTouch, Inc. (StayNTouch). Shiji is a Chinese company whose stated mission is “to provide the hospitality, food service, retail and entertainment industry with… fully integrated IT systems.” StayNTouch, a Delaware information technology (IT) company that provides hotel property management software, was purchased by Shiji in 2018. The presidential order cites “credible evidence” that the purchase “threatens to impair national security…” and restricts Shiji from accessing hotel guest data held by StayNTouch while the transaction is unwound. As described in our GT Alert published Feb. 11, 2020, the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) was recently expanded to include review of minority transactions that give a foreign investor access to American citizens’ sensitive personal data.

The move reflects CFIUS and the president’s increasing focus on foreign companies’ access to the personal data of U.S. citizens, as well as broad concerns about Chinese investment in general. Another Chinese company, Beijing Kunlun Tech Co Ltd., reportedly agreed to divest its ownership of the dating app Grindr following a request from CFIUS in 2019. While presidential orders to unwind a foreign investment transaction (which may be made at any time after closing, with no time-period limitation) used to occur only rarely, they have become more frequent in recent years. In addition, many transactions facing significant CFIUS-imposed mitigation measures or obstacles to clearance – up to and including recommendations to the president to block a transaction – are abandoned voluntarily before such measures are mandated, further highlighting the trend of transaction failure resulting from U.S. government national security concerns.

Considerations for Investment Opportunities Involving Sensitive Personal Data

Access to personal data may not have been the sole factor CFIUS and the president considered in ordering Shiji’s divestment of StayNTouch, and all foreign investment transactions should continue to be evaluated holistically when considering potential CFIUS concerns. However, based on these recent events and the newly expanded scope of CFIUS jurisdiction, CFIUS will continue to attach significant importance to foreign investors’ access to sensitive personal data, among a number of other important national security touchpoints. This includes identifiable data collected on U.S. citizens in quantities of one million individuals or greater, as well as geolocation data, health information, biometrics, and financial data. All parties to a foreign investment transaction involving a U.S. target that collects or deals in personal data should carefully evaluate the risk of post-closing CFIUS mitigation measures or required divestment, and consider the merits of submitting a joint voluntary notice to CFIUS before closing to mitigate these risks.

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume X, Number 72


About this Author

Kara Bombach, Greenberg Traurig, Washington DC, International Trade and White Collar Defense Attorney

Kara Bombach assists companies to lawfully export goods, technology and services around the globe. She places significant emphasis on helping clients achieve practical, workable solutions to complex regulatory situations arising under anti-corruption and anti-bribery measures (U.S. Foreign Corrupt Practices Act (FCPA) and OECD Convention), export control laws (EAR and ITAR), anti-boycott laws, and special sanctions (embargoes) maintained by the U.S. government (OFAC and other agencies) against various countries (including Iran, Cuba and Sudan), entities and individuals....

Cyril Brennan, Greenberg Traurig Law Firm, Washington DC, International Trade Law Attorney

Cyril (Cy) Brennan focuses his practice on international trade regulation and compliance, with an emphasis on U.S. export controls and economic sanctions. Cy handles matters regarding the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), U.S. sanctions programs administered by the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s anti-boycott regulations. In addition, he represents clients before the Committee on Foreign Investment in the United States (CFIUS), and advises clients on the Foreign Corrupt Practices Act (FCPA), the foreign direct investment reporting requirements of the Bureau of Economic Analysis (BEA), and other trade and investment-related regulations in the context of mergers and acquisitions.


  • Export controls and economic sanctions

  • Committee on Foreign Investment in the United States (CFIUS)

  • Anticorruption compliance

  • Foreign direct investment reporting

  • Regulatory due diligence

  • Foreign ownership, control or influence (FOCI)

Renee Latour, Greenberg Traurig Law Firm, Washington DC, Corporate Law Attorney

Renee A. Latour focuses her practice on international trade regulation with an emphasis on compliance with U.S. export controls and economic sanctions. Renee assists clients on matters related to international trade that arise under the jurisdiction of various U.S. governmental agencies, including the Departments of Commerce, State, Treasury, and Defense. She advises on U.S. export control laws, anti-boycott laws and special sanctions maintained by the U.S. Government against various countries including Iran, Cuba and Sudan.

Renee also assists...

Sonali Dohale, Greenberg Traurig Law Firm, Washington DC, Environmental and International Trade Law Attorney

Sonali Dohale focuses her practice on compliance counseling, environmental due diligence and environmental litigation under state and federal statutes. Sonali’s experience at government regulatory agencies and her background in civil and environmental engineering help give her insight into both the legal and technical challenges faced by her clients.

In addition, Sonali assists clients engaged in international trade with a variety of federal regulatory issues, including matters related to the International Traffic in Arms Regulations (ITAR), the...

Axel Urie international Trade and Customs Attorney Greenberg Traurig Law Firm

Axel Urie is a member of the International Trade and Customs Practice in Greenberg Traurig's Washington, D.C. office. He is experienced in trade remedy and customs matters, including litigation for domestic importers, producers, and foreign exporters.