Huawei ar­rest stokes fears of China reprisals among US ex­ec­u­tives

Gulf Times Business - - BUSINESS -

At a closed-door se­cu­rity meeting of US com­pa­nies in Sin­ga­pore, one topic was high on the agenda: the ar­rest of a top ex­ec­u­tive at Chi­nese tech gi­ant Huawei and the po­ten­tial back­lash on Amer­i­can firms op­er­at­ing in China.

Of­fi­cials from ma­jor US com­pa­nies who at­tended the event, a sched­uled meeting of the lo­cal chap­ter of the US Depart­ment of State’s Over­seas Se­cu­rity Ad­vi­sory Coun­cil (OSAC), voiced con­cerns about re­tal­i­a­tion against Amer­i­can firms and their ex­ec­u­tives, two peo­ple with knowl­edge of the meeting said.

A num­ber of at­ten­dees said their com­pa­nies were con­sid­er­ing re­strict­ing nonessen­tial China travel and look­ing to move meetings out­side the coun­try, one of the peo­ple added.

Se­cu­rity ex­ec­u­tives for com­pa­nies in­clud­ing Walt Dis­ney Co, Al­pha­bet Inc’s Google, Face­book Inc, and Pay­Pal Hold­ings Inc at­tended the meeting, ac­cord­ing to the sources and a LinkedIn post­ing by one of the at­ten­dees.

The com­pa­nies all de­clined to com­ment or did not re­spond to re­quests for com­ment prior to pub­li­ca­tion.

Fol­low­ing pub­li­ca­tion of this story, Google spokesper­son Taj Mead­ows said in a state­ment that it “mis­rep­re­sents” what hap­pened at the meeting.

He as­serted that there was “no dis­cus­sion on the record or be­hind closed doors about the ar­rest of a top Huawei ex­ec­u­tive or about Amer­i­can com­pa­nies op­er­at­ing in China.”

Mead­ows also said he was not at the meeting and could not say whether at­ten­dees dis­cussed China travel in­for­mally.

The dis­cus­sions at the meeting un­der­score con­cerns rip­pling through US busi­nesses in the world’s sec­ond largest econ­omy, al­ready fac­ing a del­i­cate bal­anc­ing act amid a tense trade stand­off be­tween Washington and Bei­jing.

The for­mal agenda for the meeting, held at Google’s Asia-Pa­cific head­quar­ters in Sin­ga­pore, in­cluded pre­sen­ta­tions on eco­nomic crime and ter­ror­ism in the re­gion. OSAC pro­motes “se­cu­rity co-op­er­a­tion be­tween Amer­i­can pri­vate sec­tor in­ter­ests world­wide and the US Depart­ment of State,” ac­cord­ing to its web­site.

But in­for­mal con­ver­sa­tions among at­ten­dees soon turned to pos­si­ble risks in China prompted by the ar­rest of Meng Wanzhou, the chief fi­nan­cial of­fi­cer and “heiress” of Chi­nese tele­com net­work equip­ment gi­ant Huawei Tech­nolo­gies Co, who was de­tained in Canada on De­cem­ber 1.The news of the ar­rest was made pub­lic on Wed­nes­day.

Meng, the daugh­ter of Huawei’s founder, was held at Washington’s re­quest as part of a US in­ves­ti­ga­tion of an al­leged scheme to use the global bank­ing sys­tem to evade US sanc­tions against Iran, peo­ple fa­mil­iar with the probe said.

The ar­rest has roiled global mar­kets amid fears that it could fur­ther in­flame the Sino-US trade row. Risk con­sul­tants and an­a­lysts said that the ar­rest could prompt Bei­jing to re­tal­i­ate in some form.

“This will pres­sure a lot of Chi­nese of­fi­cials to look strong in this dis­pute,” said Nick Marro, Hong Kong-based Asia an­a­lyst at the Econ­o­mist In­tel­li­gence Unit, who added that tech­nol­ogy com­pa­nies were par­tic­u­larly at risk.

“This could mean ei­ther tak­ing a stronger stance on trade ne­go­ti­a­tions, or tak­ing a stronger stance on US tech firms in China right now.”

Asked whether there would be any re­tal­i­a­tion against any for­eign ex­ec­u­tives in China, For­eign Min­istry spokesman Geng Shuang said on Fri­day China has al­ways pro­tected the law­ful rights of for­eign­ers in China in ac­cor­dance with the law.

“Of course in China they should re­spect China’s laws and rules.”

OSAC says it is made up of 34 pri­vate and pub­lic sec­tor mem­ber or­gan­i­sa­tions. It lists its events on its web­site, in­clud­ing the De­cem­ber 6 meeting in Sin­ga­pore.

There was also a sep­a­rate listed meeting held in Shang­hai on the same day. Prashant Nayak, Dis­ney’s Asia Pa­cific direc­tor of cor­po­rate se­cu­rity, posted about the Sin­ga­pore meeting on LinkedIn, tag­ging other ex­ec­u­tives at Google, Face­book, Ama­zon.com Inc, Mar­riot In­ter­na­tional Inc, Mi­crosoft Corp and oth­ers.

Nayak did not re­spond to a LinkedIn message seek­ing fur­ther com­ment.

The sec­ond per­son with knowl­edge of the event said the Huawei ar­rest and po­ten­tial fall­out was a hot topic at the meeting.

A se­nior diplo­mat from the US em­bassy in Sin­ga­pore gave open­ing re­marks, but an em­bassy spokesper­son said she left be­fore any dis­cus­sion.

Asia-based risk con­sul­tants said they had seen a rise in the num­ber of clients ask­ing about the Huawei is­sue and po­ten­tial con­cerns re­lated to the im­pact on US firms in China.

Jakob Korslund, CEO of Sin­ga­pore­based con­sul­tancy Deutsche Risk, said his firm had re­ceived a num­ber of enquiries in the last two days ask­ing about the risks of trav­el­ling to China. “For a few we have ad­vised post­pon­ing trips that were not time crit­i­cal, telling clients to wait for the next few weeks to see the sit­u­a­tion,” he said.

James McGre­gor, chair­man of APCO World­wide’s Greater China re­gion, said com­pa­nies would likely err on the side of not send­ing ex­ec­u­tives to China for the time be­ing. “It’s all about avoid­ing risk, be­cause what do you do if some­body is ar­rested?” he told Reuters, ad­ding anx­i­ety was also spread­ing among ex­ec­u­tives al­ready in China.

“Peo­ple are jok­ing about it a lit­tle bit and say­ing ‘maybe I should take an early Christ­mas trip home’.”

A Huawei sign is seen at its head­quar­ters in Shen­zhen. Of­fi­cials from ma­jor US com­pa­nies voiced con­cerns about re­tal­i­a­tion against Amer­i­can firms and their ex­ec­u­tives.

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