A 203-Year-Old Trading Empire Faces China’s Wrath Over Hong Kong

In the 1990s, as Britain was preparing to hand over Hong Kong to China, Adrian Swire was worried. The chairman of the Swire business empire based in the longtime British colony was concerned that its Cathay Pacific Airways Ltd. could lose traffic rights once China took charge in 1997. He decided to make a deal: allow Chinese-owned enterprises to increase a stake in Cathay to ensure friendly ties with Beijing, according to his since-declassified correspondence with John Major, U.K. prime minister at the time, and his government. State-owned Air China Ltd. is currently the carrier’s second-biggest shareholder after Swire.

Today, after months of protests that have widened the divide between the semiautonomous region’s residents and the central government in Beijing, Swire’s 45-year-old son, Merlin, now chairman of the group’s publicly traded Swire Pacific Ltd., finds himself in a similar quandary. After some of the carrier’s more than 32,000 employees joined the protests, China’s aviation authority made clear government officials’ displeasure with what they saw as a possible threat to aviation safety. Chinese officials called for some Cathay workers who had publicly supported pro-democracy protesters to be banned from flying into and over China and asked for the names of all Cathay workers whose jobs take them through Chinese airspace. China also demanded that Cathay draw up a new plan to improve flight safety and security measures. And, in case that pressure wasn’t intense enough, some big state-owned businesses including China Citic Bank International Ltd. and China Huarong International Holdings Ltd. advised employees not to book Cathay flights.