The Rio Tinto saga has been playing out for some months now. Rio Tinto, an Anglo-Australian mining giant focused on the extraction of minerals and production of iron ore, entered into talks with Chinalco early this year regarding an investment by Chinalco. The strategic partnership would have helped Rio Tinto pay off some its debts, and would have been China’s largest investment in a foreign company. According to a Xinhua report, “Rio Tinto scrapped a proposed 19.5 billion USD investment by Aluminum Corp. of China, or Chinalco, on June 5, and turned to rival BHP Billiton.” The Chinese government responded to Rio Tinto’s choice of the Australian firm, whose proposed investment was only 5.8 billion USD, by announcing, “if the revenue of the joint venture of Rio Tinto and BHP Billiton reached ‘a certain amount,’ China's anti-monopoly law would apply.“

Relationships between the companies continued to deteriorate until, on June 10th, AP reported, “Four employees of Anglo-Australian miner Rio Tinto Ltd. have been arrested on charges of stealing state secrets.”

Photo: public.resource.org

As major bribery was alleged, and the Australian government pushed China on the detentions, Chinese netizens weighed in with their opinions and articles emerged in the Chinese blogosphere about the profitability of Rio Tinto’s business in China.

For foreigners in China running their own businesses or planning to start one, the case may be a chilling example of the perils of doing business in China. To others, the Rio Tinto case is merely an instance of a country protecting itself from harmful and illegal foreign interests and exercising its right to judicial sovereignty. We asked you…

What do you think the detention of Rio Tinto employees says about doing business in China?

Perspectives seeks to promote dialogue and cross-cultural understanding by featuring Chinese and foreign responses to a single question. Email us to be added to our weekly question mailing list or to suggest questions of your own and feel free to add your perspective in the comments section below.

It's scary.
J / USA

China has the right to do as its laws and customs permit, and that seems to be quite different from international ways. Just like Chinese cooking and eating. The differences can be large and enjoyable, or not so large or so enjoyable. I think starting a non-Chinese restaurant in China can be problematic – I've seen some attempts fail in Shenzhen, even quite close to Hong Kong. This shows the same pattern. And it's the same with other business matters. Moving to an international context, there needs to be some kind of basic understandings for how different cultures interact in profitable ways. The "detention of Rio Tinto employees" story is bringing out all kinds of other unsavory stories about the treatment of Western business people in China. These stories are raising business barriers by raising relationship barriers. Not good.
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I just realized how terrible the situation has become. The government is taking control of everything: the businesses, the press, the prices...it means don’t mess with Chinese enterprises. There are troubled waters under the bridge. Have you seen the movie “Changeling”? That was a situation solved through luck and the media’s reports. We can only hope that the press can stay neutral. If not, the future is dark. 
G / China

You've gotta be kidding me. Bribery is a cultural norm in China, especially when doing business. Foreigners and Chinese know that. The detained guys are patsies.
R / USA

I could go on for a long time about this. This episode demonstrates quite clearly China's disregard for the principles that should underpin when and how an individual is detained. International business should be very worried; this is a clear message that anytime negotiations don't go China's way there will be reprisals. Further, they have possibly used spurious allegations in order to confiscate computers and conduct an illegal search of Rio premises. There's one more issue here which was raised somewhere, namely the attitude in China that race trumps citizenship and that a Chinese Australian/American/Brit/Canadian etc working for a foreign company is somehow a traitor to the Motherland. 
S / UK

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Related Links

Chinese vs. Foreign Business Practices
Rio Tinto Makes, Loses Billions in China
Survey: How Chinese Respond to Rio Tinto's Alleged Espionage
China arrests Rio Tinto employees on spy charge
Rio Tinto-Chinalco: China Is Not Amused

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