Chinese firms going overseas beginning to factor in the need to guard against security risk

KUNMING (Yunnan) - The sacking of a Chinese garment factory worker in Yangon in February this year led to the ransacking of the plant by 300 of its local employees who also held seven Chinese workers captive.

In another case in 2015, a Yunnan timber company signed a forestry deal with a local government of an unspecified country that led to it being caught in a conflict between the central government's military and the local army. Not only did the company suffer heavy financial losses but 153 of its workers were also arrested and charged.

These examples of security risks that Chinese companies encountered as more of them invested directly in South-east Asia were highlighted on Saturday (Nov 9) by Mr He Xifeng, director of the Council of South-east Asian Affairs at the Kunming Lawyers Association.

He was speaking at a session on protecting Chinese investments overseas on the second and last day of the China-Asean Entrepreneurs Forum which saw nearly 1,300 businessmen and academics from the region gather to share experiences and discuss business opportunities.

Apart from the Asian region, Chinese companies and citizens have also encountered security problems in recent years in conflict zones in Africa, such as in South Sudan and Libya, and in the Middle East, including in Iraq and Yemen, where the government had to act to evacuate Chinese nationals caught in the cross-fire.

The problems encountered by Chinese firms overseas are in part due to the lack of understanding of the need to take measures to manage security risks, said Mr Zhe Meijie, president of the VSS Security Group, a security services firm.

"Despite the frequency of incidents, there are those who feel fortunate to be spared and don't recognise the need to take preventive and control measures against security risks," he said.

Many Chinese state-owned enterprises and private companies taking part in the Belt and Road Initiative (BRI) tended to neglect security risk analysis even though they were diligent about financial and business risk analyses, according to Mr Joshua Kwai, group CEO of Singapore JK Consultancy Holdings Pte Ltd.  This tended to put them at a disadvantage in the security arena.

The BRI is an ambitious plan mooted by Chinese President Xi Jinping in 2013 to build infrastructure such as roads, railways and ports in developing countries that link China to Europe and Africa.

However, the situation is changing, , said Mr Kwai. "They have come to the realisation that they need to do something before they go out including making a security risk assessment (and having) an integrated security plan," he told The Sunday Times.

Mr Kwai, who gave a presentation on overseas terrorism risk management, said that Chinese security firms, although eager to move overseas with Chinese businesses, lacked the capability in terms of security risk assessment and developing of security plans overseas as they did not have enough knowledge of the local political, economic, cultural and security environment.

"The good news is that they are beginning to learn and learning very fast," he said, adding that his company JK Consultancy Holdings Group was partnering local security firms to prepare them to go overseas.

Agreeing, Mr Wang Guobao, who heads the Chinese Overseas Security Group, noted that with the BRI, Chinese security companies would be playing catch up to provide security services of international standards.

He said Chinese security firms should raise their standards while endeavouring to provide enough security products to Chinese companies overseas.

They needed to have talent that was not only capable of carrying out security missions but also had a good grasp of the local language and customs as well as the fields of risk analysis, finance and law.

Apart from security issues, participants of the forum also discussed tourism in the digital age, revitalisation of the Chinese countryside and trade and investment opportunities in Laos and Myanmar.