MIT Sloan Management Review Article on The Rise of Exit Bans and Hostage-Taking in China

Foreign entities doing business in China are facing increasingly grave risks. On top of the high-level geopolitical and economic risks to consider, the growing incidence of exit bans, which prevent foreign executives from leaving China if their company becomes involved in a dispute, imposes a very individual human risk. While there has been widespread media coverage of a few cases — the exit ban placed on a Singaporean executive from U.S. investigations company Mintz Group and the detention of five of its Chinese employees; the tit-for-tat detention of two Canadian businessmen in retaliation for U.S. fraud charges brought against a Huawei executive arrested in Canada — many companies operating internationally confront the reality of exit bans and commercial hostage-taking in relative obscurity.

This risk is increasing and unlikely to abate soon. Little in the ordinary course of business is more disruptive or volatile than the detention of company executives or employees abroad. Companies operating in China should prepare for these potential scenarios in advance.

About the Author

Jack Wroldsen is an assistant professor of business law and public policy in the Orfalea College of Business at Cal Poly, San Luis Obispo, California. He was an NSEP scholar to Chile and also studied and worked in Argentina and Mexico. Chris Carr is a professor of business law and public policy in the Orfalea College of Business at Cal Poly, San Luis Obispo. He is also a four-time Fulbright award recipient (Italy, Tunisia, Pakistan, and Mongolia).

Learn more about MIT SMR.