Trump Orders Chinese Firm to Divest From US Hotel Software Company, Citing Security Concerns

March 6, 2020 Updated: March 6, 2020
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A Beijing-based company was ordered by the United States on March 6 to divest all interests from a Maryland-based company that it acquired back in September 2018.

President Donald Trump ordered Beijing Shiji Information Technology to divest all interests in StayNTouch, a hotel property management software company, over national security concerns. The Chinese Communist Party requires most of the companies in their country to share information with the party’s intelligence sector.

In the order, Trump said there was “credible evidence” that led him to believe that Shiji “might take action that threatens to impair the national security of the United States.” The order prohibits the acquisition of StayNTouch or any of its assets. Shiji is an IT company that provides software to different industries.

The divestiture must be completed within 120 days, according to written conditions from the Committee on Foreign Investment in the United States. The order also states that Shiji and any of its other subsidiaries or affiliates must immediately “refrain from accessing, hotel guest data through StayNTouch.”

StayNTouch lists Shiji as their parent company on its website. StayNTouch states that they were was founded in 2013 by Jos Schaap. The company describes itself as a “mobile hotel property management system (PMS) company focused on developing solutions that help hotels raise service levels, drive revenues, reduce costs, and ultimately change the way hotels can captivate their guests.”

The website also states that the Shiji Group acquired StayNTouch in September of 2018, after an initial investment in the company’s 2016 Series A fundraiser. StayNTouch did not respond to a request for comment by The Epoch Times on the new order.

A Shiji spokesperson told The Epoch Times in an emailed statement that they are disappointed in the order.

Shiji is not a threat to U.S. security in any way,” the spokesperson said. “The U.S. government did not adequately explain the basis of its decision to us. In fact, Shiji does not access the guest data of StayNTouch Inc.’s customers.” 

Trump’s order comes at a time when U.S. officials and politicians from both parties are expressing concern over China’s growing influence and lead in different technologies. There have been a number of recent hearings regarding China’s influence in 5G networks and “big tech” companies.

Days ago, a bipartisan group of U.S. lawmakers, led by Senate Minority Leader Chuck Schumer (D-N.Y.) and Sen. Ben Sasse (R-Neb.), urged the UK Parliament to reconsider its decision to allow China’s Huawei a role in British 5G telecommunications networks amid a slew of security concerns.

Nearly two dozen lawmakers called on the United Kingdom to work closely with the United States and to take steps to mitigate the risks posed by Huawei, including the fact that the regime in Beijing requires its companies to share its information with the Chinese Communist Party’s intelligence sector.

“Given the significant security, privacy, and economic threats posed by Huawei, we strongly urge the United Kingdom to revisit its recent decision,” they wrote in the letter, addressed to the House of Commons, on March 3.

In January, UK Prime Minister Boris Johnson said Huawei will supply up to 35 percent of the country’s 5G communications infrastructure.

U.S. lawmakers said in the letter that, while banning Huawei from “core” 5G infrastructure could address some security risks, it would be “very challenging, if not impossible, to separate ‘core’ equipment from that considered to be on the periphery.”

Washington has repeatedly stated that Huawei—founded in 1987 by a former People’s Liberation Army engineer—is an extension of the Chinese regime and that it assists Chinese intelligence in stealing secrets. Huawei denies the assertion.

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