SHANGHAI—Thousands of China-based U.S. and other foreign business executives remain stranded outside the country due to coronavirus-related travel restrictions, leading some to give up hope of returning and posing operational challenges for their companies.
The travel disruption due to public-health concerns matters not just for business but also for geopolitics, U.S. business leaders say. With tensions between the U.S. and China at their worst in decades, the American business community—traditionally a buffer in conflict between the two sides—risks being hollowed out by the travel freeze.
“Losing big parts of the American business community in China will erode that goodwill,” said Ker Gibbs, president of the American Chamber of Commerce in Shanghai. Mr. Gibbs said the U.S. stands to lose influence and suffer economically if its corporate footprint in China shrinks permanently.
By mid-August, more than 1,000 U.S. businesspeople based in the financial hub of Shanghai, not counting family dependents, were stuck overseas, according to Mr. Gibbs. Thousands more Americans living in other parts of China have also been marooned abroad.
On Monday, Amcham China said it had obtained preliminary permission from the Chinese government to bring in U.S. businesspeople on a charter flight from San Francisco to Shanghai tentatively scheduled for Sept. 12, though it said there were additional procedures to complete before the flight could be confirmed. The U.S. flight has taken many weeks to organize, with other countries having secured permission to bring charter flights into China several months ago.
Altogether around 250,000 foreign professionals normally based in China remain stranded outside the country, according to an estimate by the European Union Chamber of Commerce in China.
While the Chinese economy is rebounding—gross domestic product grew by 3.2% in the second quarter after a rare slump in the first quarter—many foreign companies say staffing disruptions are hampering their efforts to truly return to normal.
A July survey by the European chamber’s Shanghai chapter found that 56% of companies have staff who haven’t managed to return to China; 40% of these affected companies said their absence was damaging sales.
The Covid-19 pandemic hit China in late January, when many expatriates were traveling abroad for the annual Lunar New Year holiday. With China then the only country facing a serious outbreak, many chose to extend their time outside China, only to be wrong-footed by the surprise announcement, made with just two days’ notice, that China would shut its borders March 28.
China has yet to indicate when it might loosen its travel restrictions, with the incidence of Covid-19 cases still far higher in the U.S. and many other places than in China. The U.S. prohibits foreign nationals from entering if they have been in China, Europe and other specified countries in the past 14 days. The European Union started easing entry restrictions for some countries with low infection rates in June, and said it would allow Chinese nationals to enter once China reciprocates by reopening to Europeans.
The German Chamber of Commerce in China helped organize a Lufthansa charter flight from Frankfurt to Tianjin.
Photo:
Andreas Landwehr/DPA/Zuma Press
Longtime Shanghai resident and New Jersey native Brian Tam was vacationing in Europe with his girlfriend when the Chinese authorities raised the drawbridge. “We wanted to come back to Shanghai because it was our home,” he said. “But now it doesn’t seem like it’s going to be feasible.”
Mr. Tam, who runs a branding consulting company that has worked in China with multinational clients such as Unilever
PLC, has been stuck in Lisbon since March. As the cost of renting an apartment there mounted, Mr. Tam gave up his Shanghai apartment, losing most of his belongings he had inside it. “We’re exploring options,” he said, “but our future’s unlikely to be in China.”
It is theoretically possible for foreign residents to return, either on charter flights or on the small number of scheduled flights still operating, and several hundred U.S. businesspeople have managed to get back, according to AmCham Shanghai. But the process is highly complex and favors big companies with enough resources and connections to navigate the formidable bureaucratic obstacles.
In early August, Chinese authorities relaxed rules for European residents wanting to come back to China, but Americans still face a labyrinthine procedure that includes obtaining a letter of invitation from their local district government in China, applying for a new visa—a step further complicated by the recent closure of the Chinese consulate in Houston—and then finding a flight.
Share Your Thoughts
What are the biggest challenges of doing business in China now? Join the conversation below.
Phillip Branham, who runs an engineering consulting firm in Shanghai, was one of those who managed to overcome the odds.
Stranded at his home in Hawaii, Mr. Branham set about trying to return to Shanghai back in April. He managed to obtain the coveted invitation letter by convincing local authorities that he was needed in Shanghai to help U.S. clients proceed with factory projects that would bring significant investment into China.
“It’s not about what they can do for you, it’s about what you can do for China,” Mr. Branham said. “I know lots of people who couldn’t get it.”
Finding a seat on a flight back to China was the toughest part, he said.
In addition to foreign businesspeople, more than 410,000 Chinese students were stuck in the U.S. when China closed its borders, according to the Chinese government. As a result, most flights from the U.S.—including those operated by U.S. airlines—are full of returning Chinese nationals.
After weeks of frustration and multiple ticket purchases and cancellations that ultimately cost him roughly $15,000, Mr. Branham said he was finally able to leverage his million-mile frequent flier status to snag a standby seat on a United Airlines Inc. flight from San Francisco. He returned to Shanghai last month, and is now back at work, having completed two weeks of home quarantine.
A United spokesman said the airline was experiencing high demand for its two weekly U.S.-China flights, and said it hopes to add more flights once Chinese regulations allow.
While business groups from several countries have organized charter flights to return executives to China, AmCham Shanghai is still struggling to secure its first charter flight, which it hopes to fly this month.
“We’ve been working with authorities and received support for the idea, but we need a few boxes checked before we can put people on planes,” Mr. Gibbs said. For a flight to happen, the chamber needs at least 120 passengers who have all the right paperwork—and who are willing to spend roughly $4,000 for a one-way ticket.
With the fall approaching, Mr. Gibbs said, many American families are likely to abandon China permanently if they can’t return for the start of the new school year in September. That could have broader implications as the U.S. and China continue to snipe at each other over issues spanning trade, technology and global influence.
“The timing is beyond urgent,” he said. “Local government and the people of China have always pointed to positive ways in which the American business community has influenced China. Nobody wants to lose that.”