photo: Web

Chinese pharmaceutical company WuXi Biologics said on Tuesday that it sees no impact on its business after two of its subsidiaries were placed on the US Commerce Department's "unverified list" which requires US exporters to go through more procedures before shipping goods to the entities.

Shares of WuXi Biologics plunged more than 30 percent on Tuesday morning in Hong Kong before trading was halted.

The US Commerce Department on Monday said it had added 33 entities in China to its unverified list (UVL) for receiving US exports. The department said it was taking the step as it was unable to establish how export items would be used by the entities.

US exporters will now need a license if they want to ship products to any of the companies on the list. The flagged companies must certify that they are legitimate and willing to comply with US regulations to continue receiving shipments. They can come off the list by agreeing to a check and establishing that it is a legitimate business.

In a conference call held by China Securities Co, senior executives from WuXi Biologics said that the main reason for its addition to the UVL is that the US Department of Commerce cannot come to China for verification due to the COVID-19 blockade, noting that the UVL and the entity list are completely different concepts and have limited impact on the company.

Currently the company is working to have its two subsidiaries removed from the list. "The company's legal team in the US is working urgently to negotiate with the US Department of Commerce," Chen Zhisheng, CEO of WuXi Biologics said.

The company has been importing hardware controllers for its bioreactors which are subject to US export controls and the exports have been approved by the US Department of Commerce for the past decade, according to the company.

"The company complies with all US export control regulations. There will be no impact on the company's business or continued service to its global partners. Since facilities in Shanghai and Wuxi in East China's Jiangsu Province do not need such equipment in the future, the import impact on the company is very limited," the company said in the statement.

Most of the companies flagged on Monday were electronics businesses, but they also include optics companies, a turbine blade company, state laboratories at universities and other businesses.

The addition of the 33 Chinese companies brings the total number of listed entities to roughly 175. Other nations with companies on the UVL include Russia and the United Arab Emirates, according to media reports.