Wells Fargo exit ban revives fears about doing business in China
(Corrects spelling of name Qiu in paragraph 23)
By Antoni Slodkowski, Casey Hall and Scott Murdoch
BEIJING/SHANGHAI/SYDNEY (Reuters) -Fears that employees of foreign firms risk entanglement with Chinese authorities have resurfaced after news that an employee of U.S. bank Wells Fargo has been banned from leaving the country.
Business groups, diplomats and overseas executives say the incident is part of a long-term trend that had appeared to ease off as Beijing pushed to promote its appeal to foreign commerce to bolster its slowing economy.
"Such stories can raise concerns of foreign businesses regarding travel to China," said Jens Eskelund, president of the European Union Chamber of Commerce in China.
"At a time when China is proactively trying to attract foreign investment it sends something of a mixed signal."
Wells Fargo has suspended all travel to China after the incident, a person familiar with the matter told Reuters.
Shanghai-born Chenyue Mao, who spearheads the bank’s international factoring business, was subjected to the ban after she entered China in recent weeks, the Wall Street Journal reported. She is a U.S. citizen, a source told Reuters.
An emailed request for comment sent to Mao received an automated response saying she was "travelling international on business".
China’s foreign ministry spokesperson Lin Jian told a press briefing on Friday that he was not aware of the Wells Fargo matter, adding that China was committed to providing a welcoming environment for foreign companies to do business.
The U.S. embassy in Beijing said it could not comment on the specifics of the case due to privacy and other reasons.
"We have raised our concern with Chinese authorities about the impact arbitrary exit bans on U.S. citizens have on our bilateral relations and urged them to immediately allow impacted U.S. citizens to return home," a spokesperson for the embassy added.
The United States does not provide an official figure for how many citizens are detained abroad, but The Dui Hua Foundation, a nonprofit that advocates for the release of political prisoners in China, estimates there are more than 200 Americans in China alone who are wrongfully detained or facing coercive measures, such as exit bans.
The U.S. State Department updated its travel advisory for mainland China in November 2024 saying visitors should "exercise increased caution" due to "arbitrary enforcement of local laws, including in relation to exit bans."
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In a survey conducted by the EU Chamber of Commerce in China of its members last year, 9% of respondents reported challenges attracting foreign nationals to work in China due to concerns related to personal safety and/or civil and criminal liability such as company raids, arbitrary arrests or exit bans.
Of the 128 respondents, 4% said business travel from China to their company’s headquarters had been negatively impacted due to employees being unable to leave China due to exit bans.
There is no official data in China on the number of individuals subject to exit bans.
But non-profit organisation Safeguard Defenders estimates bans have shot up over the past decade and that "tens of thousands" of people - the vast majority Chinese nationals - face such bans at any one time, citing court data on civil and criminal cases.
A 2022 academic study found 128 cases of foreigners faced exit bans between 1995 and 2019, including 29 Americans and 44 Canadians. Around a third of the bans were business related.
James Zimmerman, a lawyer based in Beijing and former chairman of the American Chamber of Commerce in China, said Chinese authorities routinely use exit bans to prevent witnesses or suspects viewed as flight risks from exiting mainland China.
"Most of the time, there is a legitimate legal basis for the exit ban, while there are indeed instances of misuse of the process by the government authorities, including for political reasons," Zimmerman said
While there are procedures in place to have the ban lifted, a lack of transparency and absence of a workable bail system make it a time-consuming and challenging process, he added.
Other incidents of bans in recent years have embroiled executives from Japanese investment bank Nomura Holdings (NYSE:NMR), U.S. risk advisory firm Kroll and Swiss wealth manager UBS.
Yet some professional advisors say travel to China has become safer than several years ago, said Benjamin Qiu, Co-Chair, Asian Affairs Committee at the New York City Bar Association.
Unless your company has been specifically targeted by the state or a state-owned entity, risks are low, said Qiu, adding that ethnic Chinese travellers do face heightened risk.
"We do so much business in China and travel there so much, we can’t afford not to. I would hope this is just a one-off," said a capital markets banker at a Western bank in Hong Kong, declining to be named as the person was not authorised to talk to the media.
