HomeOppression and Human RightsThe Disappearing Executives: Businesses in China Terrified Under CCP Rule

The Disappearing Executives: Businesses in China Terrified Under CCP Rule

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A growing list of business executives and political figures have mysteriously gone missing or been detained, raising concerns about the deteriorating business climate in the country. This alarming trend is casting a chill over both local and foreign businesses operating in China, as the Chinese Communist Party (CCP) tightens its grip on power.

The latest in this unsettling sequence of disappearances includes Chen Shaojie, the chief executive of DouYu, a prominent video-streaming platform, and Zhao Bingxian, the chairman of Shandong Wohua Pharmaceutical. Chen has been unreachable since October, and while DouYu has not commented on his status, they claim that their “business operations remain normal.” Tencent, a Chinese tech giant, owns a significant stake in DouYu, adding to the gravity of the situation.

The disappearance of these high-profile executives follows increased regulatory scrutiny of DouYu earlier this year when China’s internet regulator accused the company of hosting “pornographic and crude” content. Since news of Chen’s disappearance emerged, DouYu’s share price has plummeted by 12%, reflecting the erosion of confidence in the company and the broader business environment in China.

Chen and Zhao are just the latest additions to a growing list of Chinese executives who have vanished or been detained in 2023. Among them is Fan Bao, a renowned investment banker known for orchestrating deals that led to the rise of some of China’s biggest technology companies. Bao went missing in February and has not reappeared in public since. His disappearance is reportedly linked to a corruption probe targeting a former senior executive at China Renaissance Holdings, the investment bank he founded.

This alarming string of disappearances is contributing to a sustained outflow of profits from China, with foreign companies pulling more than $160 billion in earnings out of the country over six consecutive quarters. The slowing economic growth and escalating geopolitical tensions between China and the United States are only adding to the concerns of foreign businesses operating in China.

The CCP’s regulatory crackdown is not sparing foreign businesses either. Authorities have raided the offices of New York-based due-diligence firm Mintz Group and detained employees, while questioning staff at U.S. consulting firm Bain’s Shanghai office. Furthermore, employees at foreign firms like U.S. consulting firm Kroll and Japanese financial firm Nomura Holdings have been prevented from leaving mainland China, raising concerns about the government’s increasing use of exit bans.

Despite attempts by Beijing to reassure businesses and investors through meetings with top entrepreneurs and the issuance of a 31-point plan aimed at supporting the private sector, many business leaders remain uneasy about the uncertain political climate. This unease is palpable, as noted by Fred Hu, founder and CEO of Chinese private-equity firm Primavera Capital Group, who observed that Chinese entrepreneurs are “lying low” and that sentiments are weak.

Analysts suggest that Beijing’s efforts to restore confidence will be futile unless they strengthen their legal framework to provide greater certainty to the business community and protection against arbitrary detention. Without significant institutional reforms towards the rule of law, it will be challenging for any meaningful economic recovery to occur and be sustained in China.

What makes this situation even more troubling is that it’s not just business executives who are disappearing. China’s foreign and defense ministers vanished from public view earlier this year before being removed from their posts without explanation, shedding light on the increasing opacity of China’s governance under President Xi Jinping.

As concerns continue to mount over Xi’s regulatory crackdown and the wave of disappearances, it remains to be seen how businesses will navigate the treacherous waters of the Chinese business landscape. With each executive’s disappearance, the business climate in China becomes increasingly shrouded in uncertainty, causing ripples throughout the global business community. The question that lingers is whether the CCP’s iron grip on the business world will continue to tighten, or if we will see a shift towards a more transparent and stable environment for businesses operating in China.

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