Manager questions legitimacy of US sanctions

Fentanyl: Company finds US business too risky

A trading company in Guangdong province is struggling to survive after it was sanctioned by the United States in May for selling pill press machines that could be used to produce counterfeit tablets laced with fentanyl.

A manager of Youli Technology Development Co said that the company is not at fault, and she also questioned the legitimacy of the sanctions.

"The so-called illicit drug production allegation raised by the US has nothing to do with us. We just sold the machines, which are very common in China's markets and can be used to make many things, including milk tablets using milk powder," said the manager, who requested anonymity because she feared further US sanctions.

She added that many stores in China and other countries, including online platforms, are still selling such machines and molds.

In May, the US Treasury Department imposed sanctions on several Chinese companies and individuals for selling pill press machines, molds and materials to individuals in the US, who allegedly used them to produce counterfeit pills containing fentanyl, contributing to drug abuse in the country.

Fentanyl is a powerful, synthetic opioid that has become a major cause for concern in the US. Data released in May by the US Centers for Disease Control and Prevention shows that in 2022, drugs containing fentanyl caused about 75,000 deaths, up 4 percent year-on-year.

In late June, the US Department of Justice announced a plan to formally charge the Chinese companies and individuals that were sanctioned in May. Youli and three of its employees are among those facing indictments.

The sanctions have meant huge revenue losses for the company. It has struggled to pay salaries, rent and maintenance costs, the manager said, adding that the domestic and overseas banking activities of the sanctioned individuals have also been affected.

Founded in 2013, Youli has around a dozen employees. It is mainly engaged in reselling goods such as consumer electronics and clothing to overseas markets through international e-commerce platforms, including Amazon, AliExpress and Alibaba. It also has a factory that is responsible for assembling parts of semifinished products, as well as labeling customized products for foreign buyers, according to the manager.

Before the sanctions, the company did business with buyers in the US and in European countries, receiving about 200 orders each day worth about 10,000 yuan ($1,385) on average. Now, the company's foreign trade accounts across platforms and its overseas bank accounts used to receive payments for goods have been frozen, said the manager.

Last year, the company exported about a dozen pill press machines, which it bought from other producers, she added.

The manager said that the company is only responsible for exporting the machines to overseas resellers.

Resellers who are qualified to distribute the machines, including in the US, would buy them and then resell them to other people.

"We have no right to ask the reseller whom he will sell the machines to, and we also have no idea who finally bought those machines and how they would use them," she said.

The manager said the company's US reseller recently informed her that he had been arrested by US authorities and charged with selling the machines to drug producers. The reseller said that, after a lengthy procedure, he won the case and was released because the sale of the equipment was not proved to be direct involvement in others' production of illicit drugs.

"Now that our machine reseller in the US has been exonerated, why is the US still sanctioning us without providing any evidence?" she asked.

"If our company's employees and our machines were involved in making illicit drugs, the Chinese police would have detected it and taken action much earlier than the US," she added.

The manager said that they have consulted lawyers, who asked the sanctioned individuals not to leave China until the case is settled. The company has also been advised to hire lawyers in the US to handle the case.

"Only when we win the case against the US government can the company stand a chance to recover its overseas business. I think we cannot win against the US government in such a long and costly litigation like the one the US reseller went through," she said.

After the sanctions, the company no longer has confidence in the US business environment, which now appears to be too risky, she said.

In late June, a spokesperson for the Foreign Ministry said that US law enforcement officers ensnared Chinese nationals through "sting operations" in a third country in the so-called fentanyl case. The Foreign Ministry and the Ministry of Commerce both condemned the US' actions, saying that the country was engaged in illegal bullying, and pledged to safeguard the legitimate rights and interests of Chinese companies.