U.S., Canadian Executives Privately 'Spooked' About Traveling To China | KBIA

U.S., Canadian Executives Privately 'Spooked' About Traveling To China

Dec 17, 2018
Originally published on December 17, 2018 7:12 am

U.S. executives have long known the risks of traveling to China with cellphones and laptops. Theft of intellectual property and cyberattacks underlie trade tensions between the two countries.

But executives are more skittish than usual these days.

"Certainly Canadian and American business executives are a bit spooked about traveling to China right now," says Amy Celico of business advisory firm Albright Stonebridge Group.

Travel tensions are running especially high after the Dec. 1 arrest of prominent Huawei executive Meng Wanzhou in Canada, which touched off a nationalist uproar in China. The U.S. is seeking her extradition on charges of fraud for allegedly using an unofficial subsidiary to do business with Iran — in violation of U.S. sanctions.

Things escalated last week after China detained two Canadian citizens on suspicions of national security violations.

Celico says that despite mutual suspicion, neither side wants to hurt its economic interests by provoking their business partners and publicly changing their travel policies. That "could lead to increased tensions between the United States and China," she says.

Last week, U.S. tech giant Cisco Systems inadvertently waded into the fray, after an email went out to employees advising the company would curtail non-essential travel to China. Cisco later said the email was sent in error and the company had not changed its policy.

But privately, American diplomats and business executives see China's detention of the two Canadians as a retaliatory response to Meng's arrest, says Craig Allen, president of the U.S.-China Business Council.

"If we don't recognize that as a possible signal to American interests and to American businesses, then we would be willfully blind," he says.

It's highly unusual for an individual's criminal indictment to have any bearing on a trade dispute between countries. But Meng's father founded Huawei, one of the world's largest tech firms — and one the U.S. has long regarded as a security and intellectual property threat. Her arrest comes at a time when the bilateral relationship has already soured on many fronts. (She has since been released on bail.)

The U.S. has tightened national security reviews of Chinese business activity, from investments to technology purchases. With fresh allegations of state-sponsored cyberattacks (most recently involving Marriott's Starwood guest database), Allen says the grievances between the countries have become confusingly intertwined.

"More and more, security is overshadowing the trade debate," he says. "The more it overshadows the trade debate, the more difficult it becomes to resolve the trade issues. And the more it overshadows, the less bilateral trust we have."

Brendan O'Reilly is Asia analyst for WorldAware, a company that monitors travel risks. He notes the Chinese government says it detained one of the Canadians because the nonprofit he works for, International Crisis Group, is not registered in China.

O'Reilly tells U.S and Canadian clients to make sure they're complying with Chinese regulations before traveling. "The most important thing that they should do is to not give the Chinese authorities any excuse to crack down on them," he says.

In the meantime, U.S. companies hope tensions will ease.

Celico, the business consultant, says much will depend on how President Trump and President Xi Jinping react. She says de-escalation will require the leaders to keep their countries' criminal matters separate from politics and trade.

Copyright 2018 NPR. To see more, visit https://www.npr.org.

STEVE INSKEEP, HOST:

This is a tense time to travel between North America and China. A Chinese executive was arrested in Canada at the request of the United States. She is accused of fraud. Her company allegedly got banks to help it do business in Iran, despite U.S. sanctions. China then detained two Canadian citizens inside China. NPR's Yuki Noguchi reports the arrests have made other executives tense.

YUKI NOGUCHI, BYLINE: American executives have long known the risks of traveling to China with cell phones and laptops. Theft of intellectual property and cyberattacks underlie trade tensions between the two countries. But Amy Celico says recent events have executives more skittish than usual.

AMY CELICO: Certainly, Canadian and American business executives are a bit spooked about traveling to China right now.

NOGUCHI: Celico advises multinational companies operating in China for Albright Stonebridge. She says suspicions run high between both countries. But neither side wants to hurt their economic interests by provoking their business partners and publicly changing their travel policies.

CELICO: Because it could lead to increased tensions between the United States and China.

NOGUCHI: Last week, U.S. tech giant Cisco Systems inadvertently waded into the fray. It sent an email to employees saying it would curtail nonessential travel to China. Cisco later said the email went out in error, and it had not changed its policy. Craig Allen is president of the US-China Business Council. He says, privately, American diplomats and business executives see China's detention of the two Canadians as a retaliatory response to Meng's arrest.

CRAIG ALLEN: If we don't recognize that as a possible signal to American interests and to American businesses, then we would be willfully blind.

NOGUCHI: It's highly unusual for an individual's criminal indictment to have any bearing on a trade dispute between countries. But Meng's father founded Huawei, one of the world's largest tech firms and one the U.S. has long regarded as a security threat. Her arrest comes at a time when the bilateral relationship has already soured on many fronts. The U.S. has tightened national security reviews of Chinese business activity from investments to technology purchases. Add to that fresh allegations of state-sponsored cyberattacks, most recently involving Marriott's guest database, and Allen says the grievances between the countries have become confusingly intertwined.

ALLEN: More and more, security is overshadowing the trade debate. The more it overshadows the trade debate, the more difficult it becomes to resolve the trade issues. And the more it overshadows, the less bilateral trust we have.

NOGUCHI: Brendan O'Reilly is Asia analyst for WorldAware, a company that monitors travel risks. He notes the Chinese government says it detained one of the Canadians because the nonprofit he works for is not registered in China. O'Reilly tells U.S. and Canadian clients to make sure they're compliant with Chinese regulations before traveling.

BRENDAN O'REILLY: The most important thing that they should do is to not give the Chinese authorities any excuse to crack down on them.

NOGUCHI: In the meantime, U.S. companies hope tensions will ease. Business consultant Amy Celico says much will depend on how President Trump and President Xi Jinping react. She argues de-escalation will require the leaders to keep their country's criminal matters separate from politics and trade. Yuki Noguchi, NPR News, Washington.

(SOUNDBITE OF LAST LUNGS' "33") Transcript provided by NPR, Copyright NPR.