U.S. adds Chinese entities to red-flag export list, WuXi Bio shares plunge

U.S. adds Chinese entities to red-flag export list, WuXi Bio shares plunge © Reuters. FILE PHOTO: China’s and U.S.’ flags are seen printed on paper in this illustration taken January 27, 2022. REUTERS/Dado Ruvic/Illustration

WASHINGTON (Reuters) -The U.S. Commerce Department said on Monday it had added 33 Chinese entities to its so-called ‘unverified list’, which requires U.S. exporters to go through more procedures before shipping goods to the entities.

The department said it was taking the step as it was unable to verify the legitimacy and reliability of those entities in relation to their use of U.S. exports. The entities included listed companies, universities as well as aerospace and electronics suppliers.

WuXi Biologics saw its stock plummet more than 25% on Tuesday to wipe HK$77 billion ($9.9 billion) off its market value following the addition of its units in Wuxi and Shanghai to the list. Trade in its shares was later halted.

The maker of ingredients for vaccines including AstraZeneca (NASDAQ:AZN)’s COVID-19 vaccine said, however, that while it had imported manufacturing equipment subject to U.S. export controls, Washington’s move had no impact on its business or ongoing services to global partners.

WuXi Bio was prevented by U.S. export controls from reselling or re-exporting items purchased from the United States but the Commerce Department had been unable to conduct checks that WuXi Bio was in compliance due to the pandemic, WuXi Bio’s CEO Chris Chen told an investor call on Tuesday.

“Because of COVID-19, they have not been able to travel here in the last two years to verify us, so they have put us on this ‘unverified list’,” he said.

“The affected companies are only in Shanghai and Wuxi and our factories in Shanghai and Wuxi have already been built, so there is no longer any need to buy large amounts of hardware for bioreactors.”

The company’s lawyers plan to negotiate with the U.S. Commerce Department, he added.

Shares in Hymson, a manufacturer of laser and automation equipment, slid more than 7% after a unit was added to the list.

Hymson said in a statement that the addition would not have any significant or adverse effect on its operations or financial situation. It added that it would evaluate what impact the listing could have on the company’s future development.

($1 = 7.7947 Hong Kong dollars)