VZCZCXYZ0010
RR RUEHWEB

DE RUEHGZ #0166 0740820
ZNR UUUUU ZZH
R 150820Z MAR 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0342
INFO RUEHBJ/AMEMBASSY BEIJING 0239
RUEHHK/AMCONSUL HONG KONG 0101
RUEHIN/AIT TAIPEI 0058
RUEHGZ/CHINA POSTS COLLECTIVE 0131

UNCLAS GUANGZHOU 000166 
 
SENSITIVE 
SIPDIS 
 
STATE FOR CA/OCS/ACS AND CA/OCS/PRI 
ALSO FR EAP/C 
 AND DS@ 
BEIJIG FOR C, RSO AD LEGATQ 
 
E.O. 12958: N/A 
TAGS: CASC ASEC ELAB PGOV PINS SNAR KCRM CH
SUBJECT: CHINA: AMCIT BUSINESS DISPUTE SHAKEDOWNS INCREASING AS 
ECONOMIC CONDITIONS WORSEN 
 
REF: A) GUANGZHOU 0043, B) JACOBSEN/FITCH EMAIL 3/17/09 
 
(U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED.  IT SHOULD NOT BE 
DISSEMINATED OUTSIDE U.S. GOVERNMENT CHANNELS OR IN ANY PUBLIC FORUM 
WITHOUT THE WRITTEN CONCURRENCE OF THE ORIGINATOR.  IT SHOULD NOT BE 
POSTED ON THE INTERNET. 
 
¶1. (U) Summary: There appears to have been an increase in the number 
of business disputes in which American citizens have been forcibly 
detained until money is paid to obtain the victim's release.  We 
believe the trend is related to worsening economic conditions, and 
that many cases likely go unreported.  We recommend via ref email 
that the current advice on this issue in the Consular Information 
Sheet (CIS) for China be updated to reflect the growing trend.  End 
Summary. 
 
Old Strategy, New Urgency 
------------------------- 
 
¶2. (U) Extra-legal, strong-arm tactics are long established methods 
of resolving business disputes in southern China ("the world's 
factory floor").  Frequently, the victim is threatened with violence 
and detained at a factory, hotel, or private residence until payment 
is received.  If a person is detained in a factory, scores or even 
hundreds of angry workers may be involved.  If detained elsewhere, 
at a hotel or removed to another location, the victim has often been 
kidnapped/seized by a small group of hired thugs.  While local law 
enforcement cooperates in ensuring the safety of American citizens 
in these cases, they are hesitant to get too involved.  Usually, 
these situations are resolved when a payment is negotiated and 
delivered. 
 
¶3. (U) In Guangzhou, the available evidence shows that reported 
cases involving Americans being held against their will until debts 
are paid have historically averaged approximately three or four a 
year.  However, since October 2008, there have been eleven (11) such 
cases reported.  There appears to be a higher incidence of these 
cases during trade fairs, when the numbers of foreign 
businesspersons in-country peaks. 
 
RECENT INCIDENTS 
---------------- 
 
¶4. (SBU) A case reported in February 2009 illustrates the high 
stakes sometimes involved and the lengths to which the perpetrators 
are willing to go.  Two Amcits and their Taiwanese business partner 
were forced from the road in Dongguan, a major manufacturing center 
in Guangdong's Pearl River Delta.  The victims were driven to a 
rural location and threatened with torture and death unless USD 4 
million was transferred to a bank account in China.  One of the 
factory's suppliers, not the factory owners themselves, apparently 
owed this amount of money.  The supplier transferred the money from 
the U.S. and the hostages were released the next day.  We only 
learned of the incident after the Amcit victims returned safely to 
the U.S.  Their lawyer notified us that he had asked DOJ/FBI to help 
him work with Chinese authorities to investigate and prosecute the 
case (ref B). 
 
¶5. (SBU) Two other recent cases appear to involve extortion.  In 
January, an Amcit was detained and threatened with violence at his 
factory in Xiamen, Fujian province.  The victim was convinced the 
men were affiliated with organized crime, and he insisted that he 
had no business connections with them.  In March, an Amcit was held 
in his home in rural Hainan until money was paid.  In both cases, 
the local authorities assisted the American citizens in escaping 
only after telephone calls were made from the consulate.  In neither 
case has an arrest been made or criminal charges brought. 
 
¶6. (SBU) Comment: As economic conditions deteriorate, business 
owners and factory employees grow more fearful that expected income 
from business deals and employee contracts will fall through.  Weak 
enforcement of contract law was already a problem in China's legal 
system; the economic downturn has worsened the situation (ref A). 
Under these conditions, it appears that the use of vigilante tactics 
to collect on debts is growing.  End Comment. 
 
¶7. (U) This cable was cleared with Embassy Beijing. 
 
GOLDBERG