YUM down on Chinese rioting
U.S. Companies in China Lie Low
By Joe Mcdonald
Associated Press Writer
Tuesday, May 11, 1999; 12:18 p.m. EDT
SHANGHAI, China (AP) -- Kentucky Fried Chicken outlets were closed because of damage by protesters, while an investment conference in Beijing was called off. A bomb threat to an American company emptied an office building.
Worried U.S. companies canceled public activities Monday and foreign
employees tried to stay out of sight. While many said violent anti-American protests won't affect long-term plans to do business in China, others worried that already slowing foreign investment could be
hurt.
Among the casualties was a high-level meeting between state-owned
China Construction Bank and U.S. investment house Goldman Sachs and
Co., canceled after the Chinese couldn't guarantee security.
''If this continues, it will be negative for investor sentiment,'' Fang Xinghai, a Construction Bank executive, told Dow Jones Newswires.
A Goldman Sachs spokesman in Hong Kong, however, said the company
had not canceled or postponed any meetings. ''Our meetings with our
Chinese clients are going ahead as scheduled,'' said the spokesman, who refused to be named.
Companies with distinctly American identities were targeted by protesters angry at NATO's bombing of the Chinese Embassy in Yugoslavia.
Kentucky Fried Chicken said three of its restaurants in the southern city of Changsha and one in Hefei in the east were closed after extensive damage Sunday by protesters.
A restaurant in the western city of Xi'an closed after police warned they couldn't control protesters outside, said Tony Chan, a spokesman in Shanghai for Tricom Global Restaurants Ltd., which owns 310 Kentucky Fried Chicken restaurants and 40 Pizza Huts in China.
''None of the Pizza Huts has been attacked. Maybe they think it's Italian,'' Chan said.
Three of the 54 McDonald's restaurants in Beijing closed Sunday ''for the safety of the staff and customers,'' but reopened Monday, said Mayee Tang, a McDonald's spokeswoman in Hong Kong.
The company is looking into reports of vandalism at its other outlets, Tang said.
In Shanghai, police evacuated a building Monday that houses foreign
companies after a bomb threat was telephoned to Connell Bros. Co. Ltd., a San Francisco-based trading firm. Other tenants include Budweiser Brewing Co. Ltd. and the British Council, a government cultural agency.
A bomb squad searched the building, found nothing and reopened it after about three hours. Connell closed its office for the rest of the day.
Harrington Johnson, managing director of Connell Bros. in Hong Kong,
said he suspected the company was targeted because its name in Chinese
is ''American Mutual Benefit Company.''
Despite security fears, both China and its foreign investors have strong incentives to keep doing business.
China is counting on their money to fuel growth in its slowing economy. Foreign-backed companies already produce nearly half of Chinese exports, and they are creating thousands of jobs at a time of massive layoffs at state industries. Foreign firms invested $46 billion in China last year alone.
Beijing is also eagerly trying to join the World Trade Organization, offering concessions to win admission and draw in more investment.
Negotiations on China's entry suffered an immediate setback over the
demonstrations. A U.S. government decision Monday to cancel all official travel to China because of security concerns postponed the planned arrival next weekend of U.S. trade negotiators.
Despite clashing with Washington over Yugoslavia, Beijing has been
eagerly courting U.S. business. It is cracking down on illegal fees charged by local governments, and publicizing steps to improve investment conditions.
''Right now, foreign investors are lying low. We have to wait and see
what the total impact is,'' said Kevin Young, a partner with PriceCoopersWaterhouse in Beijing. ''Things may settle down in a couple of days.''
Myron Brilliant, manager for Asia of the U.S. Chamber of Commerce in
Washington, D.C., said he has talked to U.S. businesses in China in
recent days, and ''while companies are on alert, most companies believe this won't have a lasting impact for them.''
Large U.S. companies did business Monday, but many American employees stayed home. An advisory by the U.S. State Department said Americans working in China should avoid crowds if they had to go out in public.
Richard Dore, a spokesman for Hughes Electronics, which has a small
staff in Beijing that doesn't include any Americans, said the company has issued a policy discouraging any American staff from traveling to China.
''There would have to be an extremely good reason to go,'' he said. ''It would have to an extremely critical trip to go out there.''
In Beijing, the International Financial Conference, a nonprofit group of top U.S. bankers who meet annually to discuss financial issues related to U.S. banking, canceled a conference Monday and American participants flew home, organizers said.
Officials of the Chinese central bank and government-owned Bank of
China had been scheduled to speak at the event.
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