Olympics a Bust for Beijing Business

Even as Beijing prepares to welcome the world for the Summer Olympics, some of the city's foreign residents are planning their farewell parties. China's epic economic transformation has, in recent years, swelled the city's expatriate population to an estimated 250,000. While hardly the most comfortable city, Beijing offered cheap food and lodging, and the opportunity to live in one of the world's most important emerging centers of commerce and the arts. But just as the city prepares to make its international debut by hosting the Olympics in August, many of those expats have found themselves forced to leave as a result of tightened visa restrictions imposed as part of the security arrangements for the Games.

Sabrina Mondschein, a 24-year-old American, came to Beijing last year after spending a year studying in the central Chinese city of Xi'an. She began work last fall at a small educational foundation and traveled back to the U.S. the following spring to apply for a yearlong work visa. But after returning to China, and inadvertently overstaying a temporary tourist visa, Mondschein's application for a work visa was rejected. Officials told her she didn't have enough experience with the foundation to serve as a representative in China. "I'm baffled," Mondschein says. "I don't feel angry; I don't have any bitterness. At the end of the day you're still a guest of someone else's country. It's just sobering."

It's not only long-term residents who have had nasty surprises from the Chinese authorities — business travelers and tourists have also had problems getting visas for China this summer. As a result, despite expectations of a tourist boom, the number of foreign visitors to the capital last month was actually down in comparison to last year. Some large events have been called off or rescheduled, such as a four-day rock concert that authorities ordered be held only after the Games. Security forces have stepped up patrols in neighborhoods with high concentrations of foreigners, and the Olympic organizing committee published an extensive list of rules for foreigners planning to visit during the Games. For an event meant to highlight how much China has opened up in recent decades, the pre-Olympics jitters appear to be prodding the authorities to tighten up rather than relax their social controls.

Anxieties increased after the Olympic torch was greeted with large protests during some of the international legs of its relay last spring, and the government fears similar demonstrations could hit Beijing in August. In a list of 57 rules for foreigners visiting during for the Olympics, the Beijing organizing committee declared that no protest or demonstration could be held without registering with the authorities. "Illegal gatherings, processions, demonstrations and failure to comply can result in fines or legal punishment," the rules state. Political protest banners are also prohibited from stadiums.

An even bigger concern is terrorism. The Beijing subway system began security checks at entrances on Sunday, and heavily armed police have begun patrolling some parts of the capital. Officials have said that Beijing will have an anti-terrorism force of nearly 100,000 police, paramilitary troops and the elite Snow Wolf commando unit. In March, authorities announced what they said was a failed terror attack on a flight to Beijing from the city of Urumuqi, capital of the restive western Xinjiang region. The government blamed the attack, allegedly involving a failed attempt to set a fire in the aircraft's lavatory, on separatists from the Muslim Uighur ethnic group. But human rights groups complain that the threat warnings lack specifics, and could be used to justify political crackdowns. (Interpol and the U.S. State Department, however, have also issued warnings of possible terror attacks during the Games.)

The jittery climate has clouded the expectations of hoteliers and other entrepreneurs hoping to profit from this summer's expected travel boom. "I was really looking forward to a phenomenal year, and that has slowly been tempered by the visa restrictions," says Derek Flint, general manager of the Ritz-Carlton Beijing, Financial Street. In May 346,000 foreigners visited the capital, down 12% from the previous year's figure, according to the Beijing Tourism Administration. "May and June have been tough months. July will also be a tough month before the Olympics," says Damien Little, a Beijing-based director for Horwath HTL, a hotel consulting firm. While most of the top hotels are fully booked for the Games, mid-range accommodations still have vacancies. "The four-star and three-star market has perhaps more than 50% of the rooms available," says Little.

The economic pain is felt well beyond the hospitality industry. Business groups complain that the visa rules are keeping overseas investors from visiting factories, and blocking retailers from attending trade fairs. In Hong Kong, the autonomously governed Chinese city that is a key entry point to the mainland, long lines of people wait to plead their case to officials at the Chinese visa office. "It's really a hassle and adds a lot of time and expense," says Richard Vuylsteke, president of the American Chamber of Commerce in Hong Kong. "Nothing is insurmountable, but it increases the cost of business and makes people think twice before going in." The group sent letters of complaint to the Chinese foreign ministry and the Hong Kong government. But they don't expect to see any improvement before the Games' conclusion. "Our interest is that things go back where they were before after Olympics," Vuylsteke says. "Otherwise this will have an impact on business plans."

The visa problems are affecting more than just business, however. Farnoosh Famouri, a 25-year-old Australian, plans to marry her American fiance in Beijing on July 6. The couple, who met while working in the Chinese capital, invited 30 friends and relatives to join them, before realizing that they might not be able to renew their own visas in time. After meeting with several denials, Famouri returned to the visa office with her visiting parents for one last attempt. Upon learning that she planned to be wed in China, the officer extended Famouri visa for two weeks. "I was so happy and so excited after three months of so much stress," she says. Still, she has to wait to learn if her fiance's visa can be extended as well.