China's investigation into possible gambling-related crimes of Australian casino operator Crown Resorts Ltd, including the detention of 18 employees, should serve as a warning to other foreign companies doing business in China, according to legal experts.
Experts and gambling industry insiders also believed that the move indicates that the Chinese government is intent on strictly enforcing the rules on marketing and promotion of gambling in the country, a Wall Street Journal report said.
The report said that the news about the detention has raised concerns among businesses in Macau, Las Vegas and other areas as consultants have advised foreign executives to stay out of China in the meantime.
Jason O'Connor, an executive of Crown's international VIP business, was among the three Australians detained in Shanghai.
China is intensifying its efforts against businesses that do not comply with its laws, according to Dan Harris, a partner at law firm Harris & Moure in Seattle. He also advised executives not to travel to the country.
"Fifteen years ago, not many companies got caught. China didn't have the forces in place to catch these people, and they probably didn't have the desire," Harris said. "Now, China has begun to "step up its game."
Although Chinese President Xi Jinping has implemented a campaign to crack down on corruption by party officials and restrict capital flight, some Chinese nationals are still into gambling.
In Las Vegas, 10 percent of gambling revenues to casinos came from Chinese nationals while in Australia, it accounts for about 15 percent, according to analysts from CLSA, a brokerage group.
CLSA, however, said that in other parts of Asia, the impact of Chinese nationals on casinos is much greater. In the Philippines, 25 percent of the gambling revenue is contributed by Chinese nationals, with 30 percent in Singapore, 60 percent in South Korea and more than 80 percent in Macau and Saipan.
Aside from gambling, Chinese authorities have also looked into foreign business interests in mining, pharmaceuticals and financial services.
In 2010, Xu Feng, an American citizen, was sentenced to eight years imprisonment for acquiring data on China's onshore oil wells, on behalf of his employer. The data were classified as state secret.
Similarly, in 2014, British national Peter Humphrey and his American wife, Yu Yingzeng, who had been investigating a case for GlaxoSmithKline China office, were convicted for buying personal information on Chinese citizens. The couple was also later found guilty of bribery.
Experts said the recent cases indicate that foreign companies must be aware of Chinese laws and changes in its political system.