The six-day detention of a US businessman by Chinese employees at a medical supplies factory has bought risk mitigation back into the spotlight, but the good news is that Asia is still a relatively safe place for multinationals.
Chip Starnes was held captive by staff over a pay dispute, but he was released unharmed on Thursday. His experience is similar to ‘dozens of others’ that have happened in China, says Sam Olsen, MD and head of the Asia security practice of Kroll Advisory Solutions.
“Western employers fail to understand that China has a very different understanding of labour relations, with most Chinese employees unused to or unfamiliar with the notion of lay-offs.”
Dane Chamorro, director of global risk analysis, Asia-Pacific for Control Risks, says these incidents are far more common than people realise, with probably only one or two percent being reported, because the authorities don’t like to get involved in commercial disputes. Workers in many Asian countries often feel compelled to take matters into their own hands because of very lengthy delays in having civil disputes heard by the courts. Both Olsen and Chamorro say, however, that finance workers are less likely than workers in manufacturing or extractive industries to be affected by disputes, kidnapping, or other security worries.
But, says Olsen, all foreign executives who suspect their company is about to take action that will antagonise the work force – such as staff cuts or fraud investigations – must go well prepared. “Make sure you have enough water on you to last several days. And loo roll – life can get very uncomfortable without toilet paper. And, of course, keep any medication you take on your person.”
A growing trend, says Olsen, is that Asian companies are recognising the risks of operating outside of their region, particularly after 10 Japanese nationals were killed during a hostage crises in Algeria earlier this year.
Olsen cites the example of a Japanese client that has just called on Kroll to establish a crisis management plan for their operation in Nigeria after Japanese nationals refused to be transferred until the company had procedures to protect or extract them in a crisis.
Chamorro says kidnapping for ransom is a centuries-old tradition in parts of Asia, with people of Chinese origin being particularly vulnerable in certain areas of Malaysia and the Philippines. Ransoms running into millions of dollars are usually demanded, but these are whittled down by expert negotiators. “Both parties generally understand that this is a business transaction.”
Although terror and kidnapping-related incidents grab the headlines, Olsen says companies need to recognise that the ‘prosaic’ risks are the biggest concern. Research shows that the main concern for multinational executives in foreign countries is having a car accident, followed by general crime and then death or injury by fire. The latter is unfortunately common in many parts of Asia due to the prevalence of fake fire certificates.
Olsen says there are ‘isolated’ hotspots where multinational executives face significant dangers. These include Pakistan, Kashmir, and certain parts of the Philippines, Sri Lanka, Burma, Cambodia and Thailand. Certain parts of north and east India can be very hostile to foreign workers, especially where the Maoist Naxalite rebels are active.
Chamorro points out that women executives from any industry should be well briefed on the danger potential when travelling to some areas in north India, because of the “very aggressive and male dominated environment where you cannot count on the authorities to come to your rescue.”
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