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China’s Risky Business Climate: A Warning for International Executives

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Source: Wall Street Journal

The allure of China’s massive market has drawn international businesses for decades. However, recent events have signaled increasing trepidation among foreign executives about setting foot on Chinese soil. Their concern? Once they enter, they might not be allowed to leave.

Recent exit bans on foreign executives and Beijing’s stringent treatment of international companies have exacerbated the hesitancy about business trips to mainland China. Business travel agencies have noted a surge in cancellations and postponements. ATG Travel Worldwide’s CEO, Tammy Krings, mentioned a significant rise in “cautionary attitude” towards travel to China, resulting in about a 25% uptick in trip cancellations or delays by U.S. companies.

This burgeoning reluctance holds potential repercussions for the already strained Sino-U.S. relationship. With tensions surrounding topics like Taiwan, AI chips competition, and prolonged trade disagreements, businesses are more keenly evaluating their exposure to China and are isolating their Chinese operations from their global endeavors.

A paramount concern for U.S. corporations is the potential for their employees to face exit bans, leaving them trapped in China either temporarily or indefinitely. Beijing uses such travel restrictions for diverse reasons, including criminal investigations, applying pressure on dissidents, or gaining the upper hand in disputes with foreign entities. In some cases, individuals aren’t even the primary subjects of investigations but still face these restrictions.

One alarming instance involves a Hong Kong-based senior executive from the U.S. risk-advisory firm Kroll, who has been barred from leaving mainland China for months. Similarly, a high-ranking investment banker from the Japanese firm Nomura faces a similar predicament.

Private security firms have also reported detentions of their clients in China. Dale Buckner, CEO of Global Guardian, highlighted that many have been “soft interrogated” in Chinese airports or hotels. To mitigate such risks, some U.S. firms now hire security consultants to evaluate their employees for potential detention triggers, like military experience or dual nationalities.

While China’s Ministry of Foreign Affairs remains silent on these concerns, the apprehension among foreign businesses persists. Earlier this year, anxiety increased when Chinese authorities raided offices of multiple firms, casting doubts over the nation’s business-friendly image. Many American businesses’ confidence in China’s market potential has now plummeted to a historic low.

Notably, some executives, such as Apple’s Tim Cook and Tesla’s Elon Musk, have made prominent visits to China recently. However, the arrest of such highly visible entities would be problematic for China, and is likely beyond their current aspirations.

Security experts urge visiting professionals to be cautious about their activities in China. Advisories now include warnings against research that might be perceived as detrimental to China or local companies. There’s also a recommendation to use “burner” devices devoid of personal data while in the country – however how much does that put you on the radar of Chinese intelligence services?

The State Department’s recent ranking places China in a high-risk category alongside nations like Egypt and Lebanon. Their advice? “Reconsider travel” due to the unpredictable enforcement of local laws, including exit bans.

The escalating concerns surrounding personal safety and freedom have caused many to rethink their strategies in China. For foreign executives, the recent events serve as a stark reminder that business, when intertwined with politics and power, can come at an unforeseen personal cost.

Editor’s note: This is very real, some of us who have a background in security work with the U.S. government, would almost certainly be under surveillance and could easily be arrested for questioning. Especially CEO’s who run a site like AntiCommunist Zone!

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