Companies fear detention of staff in China

Sydney | Dozens of big Australian companies are reviewing the safety of their expatriate staff in China and reassessing plans to send employees back to Shanghai and Beijing this month as the country eases border restrictions.

Senior executives at ASX-listed companies operating in China told The Australian Financial Review they had approached the Department of Foreign Affairs and Trade (DFAT) and Australian consulates and embassies in China for advice.

One major importer, which did not want to be identified, said one of its Australian staff decided to return to Australia at the weekend. While most companies that spoke to the Financial Review said they were not planning to remove staff already on the ground, they would consider stopping others due to fly out this month.

"We have had one Australian citizen return home today, and one due to return [to China] today has delayed their return. We are feeling absolutely no effect on the ground here, but the group must exercise duty of care," one executive in China said.

One source said DFAT had been inundated with requests by Australian companies about the safety of their staff in China since the detention of Australian journalist Cheng Lei and the removal of two other Australian journalists from their bureaus in China last week.

DFAT is advising companies that they are best placed to assess the risks. Corporate risk consultants have also told Australian companies and law firms the risk to business executives is lower than it is for journalists.

A DFAT spokesman declined to comment because of privacy considerations.

'No indication' of heightened risks

Control Risks, which advises foreign companies on political risk in China, said in an advisory sent to an Australian company that the departure of journalists from The Financial Review and the Australian Broadcasting Corporation marked a further deterioration in bilateral relations "which are increasingly likely to affect Australian companies in China".

"However, there are currently no indications that Australians working in China or conducting business travel to the country face heightened risks of politicised arbitrary detention," the advice said.

"Non-compliance with business regulations will remain the main driver of detention risk for most Australian companies operating in China, although worsening diplomatic ties may intensify regulatory scrutiny for Australian firms."

There are more than 25,000 Australian citizens living in China, including about 8000 in Shanghai alone.

Scott Morrison warned in July that Australians living in China were at risk of arbitrary detention. At the time, many executives in Shanghai said privately they thought the advice was overly cautious and they were not concerned for their welfare. But as tensions escalated last week, companies have stepped up their risk assessments.

One Australian lawyer in China said he was advising companies to be cautious without getting hysterical. However, he said many companies had been reluctant to take the risks seriously even during the years after the arrest of Crown Resorts' staff in China in 2016.

"We have been trying to get through to businesses to help them understand since the Crown matter. The appetite to take it seriously is very low," he said.

The shift in sentiment about sending staff to China comes as the Chinese government moves to entice foreign exporters to Shanghai in November for the annual China International Import Expo. The event, which will be opened by President Xi Jinping, is designed to promote the Communist Party's message that the country is open to the world.

The government wants foreigners on the ground for the event to do local media interviews that would reinforce its message that China has the coronavirus under control and its economy is stable and healthy.

"I'm going to plead no," said another Australian executive of a request to visit Shanghai for the event.

China closed its borders to all non-citizens except for diplomats in March in a bid to control the coronavirus outbreak. However, it has been relaxing the rules in the past six weeks and many executives and their families who have been marooned in Australia since the start of the year were looking to return.

About 60 per cent of Shanghai-based Australian companies still had staff stuck overseas last month.

There are hundreds of Australian companies with expatriate staff in China. They include BHP, Rio Tinto, Fortescue Metals, the four major banks, Bluescope Steel, Treasury Wine Estates, Woolworths, Coles and Costa.

Challenges for expatriates living in China have increased in the past two years with tighter visa restrictions, higher taxes and fewer opportunities for foreign employees. Risk consultants said the biggest threat to expatriates outside the media sector was compliance violations and Australian companies would be under greater scrutiny.

"Serious violations, particularly those deemed to endanger customers’ health and safety or affect China’s national security, are most likely to lead to detention as part of an investigation," Control Risks warned.

Former Rio Tinto executive Stern Hu spent nine years in a Shanghai prison after being charged with bribery.

Three Australian citizens working for Crown Resorts were arrested in China in 2016 after the authorities detained staff working for James Packer’s casino empire in the country.