In terms of the risks of doing business abroad, a turning point took place on February 4, 2022 during the Beijing Olympics. It was at this moment that the most powerful autocrat in the world, the Chinese Xi Jinping, offered his unconditional support to the second most powerful autocrat in the world, the Russian Vladimir Putin, declaring that “the friendship between the two States has no limits, there are no fields of cooperation that are prohibited”.
Posted at 10:00 a.m.
Following President Putin’s invasion of Ukraine 20 days later, hundreds of multinational corporations suddenly realized that their ties with Russia were becoming untenable because of Western sanctions. China is not such a problematic place, but the risks there are greater than before.
Another signal is China’s brazen use of arbitrary detention and arrest. A concrete example is that of Canadian businessman James (Jianhua) Xiao. In 2017, Chinese state agents kidnapped him from a hotel in Hong Kong. Prior to his disappearance and the confiscation of his business, Mr. Xiao was the chairman of Tomorrow Group, a multi-billion dollar conglomerate.
No charges have yet been brought, although China’s Criminal Procedure Law of 2013 specifies that no one can be detained for more than six months without charges being laid. Sixty-three months have passed since his abduction.
No one is safe in an autocracy where there is no commitment to the rule of law. No credibility should be given to any lawsuit, given the precedents of other bogus Chinese lawsuits.
The arrest and trial of Canadian hostages Michael Kovrig and Michael Spavor provide obvious examples. The two Michaels were the trump card used by President Xi to secure the release of Huawei Vice President (Finance), Meng Wanzhou.
The case of the two Michaels is a disturbing reminder of the workings of the judicial authorities of autocracies: secret detentions, interrogations for hours under intense psychological pressure and no access to a lawyer. No wonder 99.9% of defendants in China are found guilty.
Expect Mr. Xiao to receive the same treatment, not for a prisoner swap this time, but for the benefit of showing President Xi’s anti-corruption campaign at work which, in fact, is a brutal weapon. to weaken opposing factions, real or imagined, within the Chinese Communist Party.
What’s really at stake here is that the group Tomorrow became too successful, much like what happened to Alibaba founder Jack Ma, who disappeared for three months.
It is highly likely that the Chinese press will report that Xiao has confessed to his crimes, admitted his guilt, and expressed remorse for the harm caused by his actions. Quebecers should take it all with a grain of salt.
Last year, President Xi reminded everyone that the Chinese Communist Party is above the law and that judges must abide by the views of the party. President Putin used similar methods with the assassination attempt, then the imprisonment, of his political opponent Alexei Navalny.
In addition, China preys on Chinese Canadians by threatening them and using intimidation tactics if they are critical of China. Such interference activities, carried out by Chinese representatives in Canada, have increased since Xi Jinping came to power.
Seeing China taking Russia’s side in its propaganda should remind us that any information that comes from Chinese, government or media sources should be viewed with great suspicion, if not dismissed entirely.
There was a time when multinational corporations were jaded about the risks in the countries of the two most powerful autocrats on earth, despite occasional arbitrary detentions and bogus trials. However, this took place before President Putin, with the support of China, launched a war to eliminate the democratically elected government of Ukraine. The boycott of Russia by multinational companies is now well under way.
When it comes to China, there is always the known list of dangers: forced labor by Xinjiang nationals, Chinese partners dealing with the country’s military apparatus, the risk of trade being used for retaliatory , without forgetting the arbitrary trials. We must now prepare for the possibility of consequences approaching those faced by multinationals in Russia. In February, Presidents Putin and Xi opened our eyes to this important new risk.
After 30 years of globalization and heavy reliance on Chinese supply chains, one must anticipate the day when multinationals may have to leave China. We must therefore accelerate our diversification efforts now.