The disappearance from Hong Kong of Xiao Jianhua, a China-born billionaire businessman, has sent a chill through mainland business circles linked to the city, and some are looking to move their assets, according to financiers, lawyers and Chinese businessmen.
Hong Kong, a global financial centre and a “special administrative region” of China, has served as a major hub for mainland capital since the former British colony returned to Chinese rule in 1997.
But reports that Xiao was abducted by Chinese agents from the luxury Four Seasons hotel have helped undermine confidence in the legal autonomy that has underpinned the economy.
Hong Kong police have said Xiao crossed the border into China on January 27 through a checkpoint and are still investigating the case.
A source close to Xiao, who holds a Canadian passport, said he is now in an unspecified location in China, and that Xiao’s wife and brother had “fled” Hong Kong to Canada.
The Canadian consulate in Hong Kong said they had no further information on the family.
A second source close to Xiao said on Thursday he was still able to get in touch with the tycoon, with “some difficulties”.
Shortly after his disappearance, a local newspaper ad purporting to be from Xiao himself said he had not been abducted, but was seeking medical treatment “outside the country”.
The uncertainty is unnerving businessmen with links to the city.
“I don’t dare go to Hong Kong,” said Guo Wengui, a Chinese property and investment tycoon who said he knows Xiao and used to visit Hong Kong regularly.
Now, he says he would not consider Hong Kong a safe place for his assets.
Life in exile
Guo has lived in exile for several years, having been investigated by Chinese authorities several times, including in connection with a fraud case.
No charges have ever been laid and Guo said he had done nothing wrong.
A senior corporate lawyer with a global law firm said some of his mainland Chinese clients living in Hong Kong had asked him for advice on moving assets out in the two weeks since news Xiao’s case broke, possibly to Japan, Singapore or South Korea.
“They want to change location. They freaked out,” he said.
Xiao, who runs financial group Tomorrow Holdings and has close ties with some of China’s top leaders and businessmen, is ranked 32nd on the 2016 Hurun China rich list, China’s equivalent of the Forbes list, with a net worth of $6bn.
Until his disappearance, Xiao had for some years resided at the Four Seasons Place serviced apartments in the heart of the city, a favourite haunt of wealthy mainland Chinese businessmen.
A person with knowledge of the matter at the hotel said there had been a “significant decline” in Chinese occupancy since the news broke.
“Many mainlanders checked out,” the person said.
The hotel, including its three Michelin-starred restaurant Lung King Heen, was quieter now, said a Hong Kong regular who often meets mainland Chinese clients there.
The corporate lawyer source, who also frequents the Four Seasons, said several of his mainland Chinese clients had moved out of the property recently, citing concerns from the incident involving Xiao.