The new worry of work in China

Since its admission to the World Trade Organisation in 2001, much of that love has been reciprocal. China has opened its economy up to the rest of the world in a way few would have thought possible in the 1990s. It has welcomed foreign investment, foreign businesses, and with them, workers and executives from throughout the rest of the world.

For the most part, these expatriates have lived and gone about their business just as they would in Singapore, London or New York. But the secretive arrest, detention, trial and sentencing of Rio Tinto executive Stern Hu, an Australian citizen of Chinese origin, could now be planting a seed of doubt in the minds of all foreign staff on the Mainland. It certainly should raise questions for HR professionals dealing with expatriates there.

Hu was Rio Tinto’s chief iron ore negotiator in Shanghai, working to get the best prices possible for the company’s product – which continues to provide the steel building blocks of China’s economic growth.

That came to an end in August last year, when he and three local colleagues were arrested on the capital charge of stealing state information. This was later downgraded to charges of stealing commercial secrets (industrial espionage) and accepting bribes. Hu pleaded guilty to the bribe charge but denied any allegations of information theft. He was found guilty on both counts and sentenced to ten years imprisonment.

Reaction from the business community has been muted. Rio Tinto has taken a “business-as-usual” approach, not wanting to rock the boat with its largest customer. China purchases more than US$50 billion worth of iron ore every year, and no producer would be willing to turn their back on such volume. Not surprising then that Rio Tinto CEO Tom Albanese was actually in Beijing for a China Development Forum, rubbing shoulders with Premier Wen Jiabao, as the Hu trial got underway in Shanghai in March.

Its clear businesses want to be in China, possibly at any cost. And foreign investment in the Middle Kingdom necessarily means expatriate staff doing business there. But are these workers and executives at risk of stepping on the Chinese Government’s toes?

To be fair, no one knows. It’s impossible to know if the Rio Tinto case is an isolated one, or if it represents a Government using the instruments of state in its own business dealings. The secret nature of the trial, however, naturally invites a level of skepticism.

So regardless of the true innocence or guilt of Hu and his associates, it’s something HR in this region should, and will, be following closely. It may not happen overnight, but a case like this will naturally impact on the willingness of executive staff (expatriate or local) to take on assignments that compete with China’s state-owned corporations.

Careful risk management needs to be employed, and perhaps some tough decisions taken.