The recent kidnap of four oil workers from the Colombian subsidiary of a Chinese chemical company has highlighted a growing threat facing Chinese corporations who are expanding into higher risk territories in the global race to secure mineral resources, oil and gas.
Rapid Chinese expansion into politically or socially unstable countries in Africa, the Middle East and Latin America is inevitable. In fact, the Chinese Ministry of Commerce declared a 36.3% rise in foreign investment by that country’s companies in 2010, totaling a whopping $59bn. This leaves foreign national employees increasingly exposed to a whole range of new risks including kidnap for ransom and political or civil unrest.
With corporate due diligence around employee safety rising up Board agendas, I travelled with the Special Contingency Risks(SCR) team to Beijing a few weeks ago to present to over 220 representatives from major state oil, gas and mining companies on the risk of land-based kidnap and evacuation and the insurance solutions available to them.
Kidnap of Chinese Foreign Nationals Doubles
I told delegates at the event that between January 2009 and June 2011, Control Risks recorded a total of 25 cases involving Chinese nationals and 65 Chinese victims. According to a report from the specialist risk consultancy: “The number of cases involving Chinese nationals, and indeed their proportion of the total number of foreign nationals abducted, almost doubled in 2010 and remained high during the first six months of 2011.”
There were some looks of surprise in the audience when I put up the slide below which illustrates the current top ten kidnap territories according to Control Risks. The countries highlighted in red – eight out of the top ten – are the ones where there is significant Chinese direct foreign investment.
Arab Spring Evacuations
It’s not only land-based kidnaps affecting Chinese migrant workers, but political unrest too. No where was this more evident than in Libya when the Chinese government had to evacuate over 30,000 nationals who were caught up in the Arab Spring. By contrast the UK and US together had just over 1,000 citizens in Libya.
Delegates at our seminar in Beijing expressed concern during question time that the level of information available to risk managers on the evolving situation on the ground during the uprisings in the Middle East and North Africa was insufficient.
Some commented that their company’s response to the crisis had to be reactive rather than strategic. This was a topic which SCR had much to input in terms of how we were able to assist clients who faced similar issues.
Food for Thought
As China goes global, it’s not only the politically unstable areas in which they are investing that present problems, but also the fact that closer relationships with foreign partners raises the potential for discrepancies between “people risk” priorities and insurance programs that could see Chinese foreign nationals fall through the cracks.