East and West meet a little less comfortably after Rio Tinto arrests

PUBLISHED : Monday, 20 July, 2009, 12:00am
UPDATED : Monday, 20 July, 2009, 12:00am

News of the detention of four employees of Rio Tinto, the Anglo-Australian mining giant, has justifiably sent chills down the spines of mainland-based executives working for not only multinational mining groups, but any overseas firm operating on the mainland.

It is likely to prompt foreign companies to rethink how they do business there, and how their executives go about their daily business routines.

Indeed, many executives at foreign companies in Beijing have swapped bitter jokes about what can be said in the office, over fixed telephone lines or mobile phones, in e-mails or even at home.

Some have already begun to encounter subtle difficulties in their communications with government officials and mainland clients, who are less forthcoming in phone conversations or show unwillingness to meet up for drinks or meals.

Mainlanders working for those multinationals are feeling particularly vulnerable - with good reason. The four Rio Tinto employees, arrested in Shanghai two weeks ago, were three Chinese nationals and Stern Hu, an Australian passport holder and general manager of Rio Tinto's iron-ore business in China. Mr Hu was born in Tianjin and studied at Peking University before he went to study in Australia and gained Australian citizenship.

Mr Hu and the other three were arrested on suspicion of 'stealing Chinese state secrets for foreign countries', and state media also accused them of bribing steel-mill officials during the iron-ore negotiations.

On Friday, Rio issued its strongest reaction yet, categorically denying claims its employees had bribed steel-mill officials. But the fact that Mr Hu and the three others were arrested by the Shanghai branch of the secretive Ministry of State Security means mainland officials must have hard evidence implicating the four.

The Ministry of State Security - the mainland equivalent of the United States' CIA and National Security Agency combined - has sweeping powers and uses the most advanced eavesdropping technology to target and detain anyone on the mainland suspected of buying or selling state secrets.

Much has been written about the mainland's broad interpretation of its state secrets laws, which could mean that any document or information not published by official media or announced by the authorities is deemed a state secret.

Previously, charges of leaking state secrets were usually used against political dissidents, but the arrest of the Rio employees is likely to change all that. In particular, the case has put the spotlight on the millions of mainlanders working for foreign companies in China.

Until now, working for a foreign company has been one of the most sought-after jobs a mainlander could hope for - offering good pay and other attractive benefits, such as working in modern office buildings and opportunities to travel and receive training abroad, to name a few.

Multinationals that initially sent expats to the mainland at great cost have increasingly turned to mainlanders to head their China operations.

Those who studied and worked abroad, such as Mr Hu, are particularly valued, as they speak fluent English and understand Western ways of doing business while knowing their way around the country and possessing extensive social and business contacts.

But if these mainlanders, often referred to as 'bonus foreign devils' by nationalists, are unfortunately caught in the crosshairs of the authorities, they are more likely to face harsher consequences than an expatriate in a similar situation, simply because of the prevalent assumption that, as Chinese, they should know better.

Already, nationalists on some mainland internet forums have labelled the four employees 'traitors'.

Some cynical mainlanders who work for foreign companies cannot help but wonder whether the authorities would have thought twice if the people involved had been Caucasian Australians.