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Trade war

Edgy executives cancel trips in wake of Huawei arrest

Chinese and American managers fear more detentions as tensions grow

Despite reports of cancellations of business trips between China and North America, Cathay Pacific Airways officials say the airline has not yet seen a significant impact from the arrest of Huawei’s Meng Wanzhou.   © Reuters

HONG KONG/TAIPEI -- Nervous American and Chinese executives are canceling business trips to each other's countries in the wake of the arrest in Canada of Huawei Technologies Chief Financial Officer Meng Wanzhou.

"Toward the end of last week, we got so many calls from American clients who were worried," said Bradley Allen, managing director of Hong Kong-based security consultancy A2 Global Risk. "Many people are canceling travel."

American businesspeople fear that the Chinese government, which has expressed more anger about Meng's arrest than Huawei has, might retaliate by detaining U.S. businesspeople. Chinese technology executives, on the other hand, worry that the Trump administration's campaign against Chinese intellectual property rights violations could be generating arrest warrants.

"There are concerns among a lot of executives that China might retaliate" for Meng, said Shaun Rein, an American based in Shanghai as managing director of market consultancy CMR China. Said Steve Vickers, chief executive of Hong Kong political risk consultancy SVA, "Following the arrest in Canada of Meng Wanzhou of Huawei, we have noticed a marked increase in inquiries from U.S.-based companies concerned as to potential problems with traveling senior executives."

A Hong Kong-based financial technology company has moved two investor meetings to Manila from Shanghai to avoid such complications, according to its American co-founder. U.S. networking equipment manufacturer Cisco Systems, which has had disputes with Huawei in the past, sent out a notice advising staff to put off nonessential travel to China; a spokeswoman however later told the Nikkei Asian Review that the message went out "in error" and was incorrect.

A rethinking of travel is running the other direction too.

"As a government-backed chipmaker, most of our senior executives have turned quite cautious about making trips to the U.S. or even to some U.S. allied countries," said a person affiliated with Unisoc, a Chinese company previously known as Unigroup Spreadtrum & RDA. "Most of them will wait till the escalating tensions between the two sides ease somewhat before resuming their regular business travels."

Insiders with other Chinese chip-related, government-backed companies including Konfoong Materials International, GigaDevice and Innotron Memory said they are taking a more cautious stance on U.S. travel as well.

A2 Global is advising many of its American clients to put off travel and says those based in China should lay low. "Beijing's retaliation will be measured, so that it sends a signal to Canada and the U.S. without harming its key commercial links with the countries," it said in an advisory. "Therefore, high-profile Western companies in China that produce nonessential goods are at high risk of being targeted."

Executives most at risk are those holding both Chinese and North American nationalities, according to the consultancy. It also warned that executives from Japan, Australia and New Zealand, three countries that have recently taken action to block Huawei out of their next-generation telecommunications networks, also face a heightened chance of trouble.

A2 advised high-level executives from companies with any kind of regulatory problems in China to avoid travel and suggested companies may want to try to move planned meetings from the mainland to Hong Kong.

Rein of CMR China suggested that executives from American companies involved with the Taiwanese military could be at risk too given China's persistent unhappiness with such defense support for the self-ruled island it claims as its own. However, spokesmen for two such companies, Collins Aerospace and General Dynamics, both said bilateral tensions are not affecting their plans.

"At the moment, staff travels remain unchanged in the light of recent events," said Linus Terh of Collins. "We are hopeful that both countries can come to a mutually beneficial agreement soon."

Leaders of the American Chamber of Commerce in Hong Kong also say they believe travel from the city into mainland China is proceeding as usual.

"People are certainly aware of the heightened climate of tensions," said AmCham President Tara Joseph. "[But] to be honest there really has not been any reaction or hesitation to travel among the business community that is different from usual. Business needs to continue."

Cathay Pacific Airways, the airline which Meng was flying when she landed in Vancouver, has also not seen widespread cancellations on its trans-Pacific routes, according to a senior executive.

Nikkei Asian Review deputy editor Dean Napolitano and Nikkei staff writer Nikki Sun contributed to this report.

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