Fears Beijing targeting ethnic Chinese executives

AUSTRALIAN companies operating in China have been advised against appointing ethnic Chinese staff to senior executive positions following the 12-year jail sentence handed to businessman Matthew Ng.

Ng is the third Australian of Chinese descent to have fallen foul of the country's justice system in the past two years. Former Rio Tinto executive Stern Hu is serving a 10-year sentence in a Chinese jail for bribery, while another Chinese-Australian businesswoman, Charlotte Chou, is awaiting trial on embezzlement charges.

Following Ng's conviction this month, there have been discussions between Australian government officials and companies operating in China.

Sources close to the discussions told the Herald that companies have been warned privately not to appoint ethnic Chinese to senior positions, even if they hold Australian passports, as they may be putting such people at ''serious risk''.

A spokesman for the Department of Foreign Affairs and Trade denied official warnings had been given to Australian companies. ''The embassy in China briefs Australian companies regularly about the general operating environment in China,'' the spokesman said. ''The question of the ethnicity of representatives whom companies wish to send to China is not something we would discuss.''

But a number of people confirmed that talks had taken place, and that several companies had changed how they operate in China.

The chief executive of BHP Billiton, Marius Kloppers, said the company had adopted some protocols specifically for doing business in China.

''We are extremely careful … on what is done in China, what is not done in China,'' he said.

Mr Kloppers said a transformation in the pricing of iron ore two years ago had reduced the risk of doing business there. Instead of annual price negotiations, iron ore is now priced on traded market prices.

''Because it is a traded market, there are no secrets. And if there are no secrets, then it is much easier to deal with,'' he said. Hu was an iron ore prices negotiator for Rio Tinto in China when he was arrested.

Other business people operating in the country warned that significant dangers existed, and the risks for executives of Chinese heritage were on the rise.

Speaking last year after Hu was convicted, Geremie Barme of the Australian National University warned ''the protective sheath of foreign citizenship proves to be little more than gossamer''. In the past, ethnic Chinese have been hailed in Beijing as tong bao - ''compatriots'' - who bring capital, technology and foreign contact to the motherland.

However, if these tong bao tread on local powerbrokers' toes they can be labelled ''foreign agents'' or ''spies'' who are then singled out for punishment.

An Australian businesswoman based in Beijing, who asked not to be named, said Ng's conviction had ''shaken her faith'' in doing business in the country.

A young Chinese-Australian lawyer, who also asked to remain anonymous, said: ''Chinese authority is less forgiving of Chinese Australians, [and] still sees them as Chinese first and foremost. Chinese Australians are often too close to the action and they are too involved.

''They often feel the need to justify their positions to their employers to do more risky things,'' the lawyer said.

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