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Huawei Executive’s Arrest Stirs Fears About Corporate Travel – The Wall Street Journal


Courtroom sketch of Huawei finance chief Meng Wanzhou at her bail hearing in Vancouver, British Columbia, on Friday.


Photo:

stringer/Reuters

The arrest of a prominent Chinese technology executive traveling overseas sparked concerns that American executives may be vulnerable to retaliation, with some experts advising a reconsideration of travel plans.

Canadian authorities on Dec. 1 arrested Meng Wanzhou, the chief financial officer of Huawei Technologies Co. and daughter of the cellular-technology giant’s founder, at the request of U.S. officials following her arrival at a Vancouver airport. Canada is one of more than 100 countries that have extradition treaties with the U.S.

Huawei said it isn’t aware of any wrongdoing by Ms. Meng and that the company complies with laws and regulations everywhere it operates.

Some diplomats, policy experts and lawyers in both China and the U.S. said the arrest could add a confrontational and personalized dimension to bilateral tensions and raised the possibility that the Chinese would retaliate.

“Do you want to be the one that tests it?” said James Lewis, a senior fellow at the Center for Strategic and International Studies, a Washington think tank.

Rather than target American executives, China could choose to take a different tack. As the Trump administration has escalated its trade fight this year, Beijing has sought to portray itself as more fair, rule-abiding and business-friendly than the U.S.

In response to questions about possible retaliation, a Chinese Foreign Ministry spokesman, Geng Shuang, said in a regular briefing Friday that “China always protects the legitimate rights and interests of foreigners in China according to the law, but I believe certainly they should abide by Chinese laws and regulations.”

Chinese authorities in recent years have arrested and prosecuted foreign business executives in high-profile cases involving the pharmaceutical, commodity, gaming and financial industries—some arising amid tense bilateral relations with the home country of the executives’ companies. Authorities have also used travel bans to prevent foreigners involved in disputes or investigations from leaving the country.

In October, authorities in Beijing barred a wealth manager for

UBS

Group AG from leaving under circumstances the woman, the Swiss bank and local officials have declined to discuss. At the time, UBS advised certain bankers to postpone all but essential travel to China.

Huawei’s importance to China’s technology sector has sparked concern that employees of U.S. tech companies could be especially vulnerable if tensions escalate. A senior executive at a large U.S. tech company said it was premature to speculate on whether his company would change its travel policies.

“It’s really important that people in the U.S. government think about this four steps ahead, and not just one move at a time,” he said. “If we see a world where people are not just arresting tech executives but seeking their extradition from third countries, you could create a lot of uncertainty for the ability of business leaders to travel around the world.”

Huawei has figured prominently into friction between Washington and Beijing, with the U.S. claiming the company and its equipment could be used by China for spying—an allegation Huawei officials have consistently dismissed.

The U.S. has alleged that Ms. Meng lied to banks about the Chinese company’s ties to a subsidiary that did business in Iran. An attorney representing Ms. Meng at a bail hearing in Vancouver Friday told a court “there is no evidence” that the business, Skycom Tech, was a subsidiary of Huawei during the period in question. The attorney said the idea that Ms. Meng engaged in fraud will be “hotly contested.”

Julian Ku, a professor at Hofstra University School of Law who studies Chinese legal issues, said that, even if the arrest isn’t political, “the concern I have is China won’t see it that way and they’ll trump up some political thing they just came up with this week to punish an executive there.”

Going after a high-profile target like

Apple
Inc.,

he said, would be a risky strategy. “They could really scare off foreign companies,” he said. “It would be dramatic, but also costly.”

An Apple spokesperson declined to comment on the company’s travel policy for China.

The State Department issued a travel advisory earlier this year urging Americans to exercise increased caution in China “due to the arbitrary enforcement of local laws.” The alert said that U.S. citizens visiting and residing in China have faced arbitrary interrogation or detention on grounds of “state security.”

Around the world, a number of prominent executives have been detained at airports in recent months. In November, Japanese authorities arrested auto-industry titan Carlos Ghosn at a Tokyo airport on suspicions of financial misconduct. Mr. Ghosn remains in custody, but he hasn’t been charged, and, according to Japanese broadcaster NHK, has denied wrongdoing.

In January 2017, Federal Bureau of Investigation agents arrestedOliver Schmidt, a

Volkswagen
AG

executive, at Miami International Airport as he prepared to fly home to Germany. He was later sentenced to seven years in prison and ordered to pay a $400,000 fine for participating in the German auto maker’s emissions fraud.

Victor Shih, associate professor at University of California, San Diego’s School of Global Policy and Strategy, said executives traveling to China “should always be somewhat concerned.” He said Ms. Meng’s arrest should further put executives on their guard. “Until this gets resolved,” he said, “it’s an additional risk.”

Write to Te-Ping Chen at te-ping.chen@wsj.com

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