Chinese security officers reportedly arrested and locked up an Australian businessman in Guangzhou, China as authorities launched an investigation on alleged misuse of company resources, which the detained man also heads.

Jersey-based Et-China announced on its website that its chief executive, Matthew Ng, was picked up on November 16 and is now being questioned in relation to allegations of asset embezzlement.

The travel agency firm added that the Guangzhou police force is currently holding the businessman in custody as an inquiry on the alleged incident gets underway.

The online statement further said that Et-China could not give the more definite cause of Mr Ng's arrest as it clarified at the same time that its chief executive is not facing any formal charges at this time.

Et-China is reportedly listed on the AIM exchange in London and is currently engage in a joint project with state-operated China Southern, which is also China's most dominant carrier.

A spokesperson from the Ministry of Foreign Affairs confirmed on Thursday that the Australian business executive was indeed detained and currently being investigated on suspicion of embezzlement.

The Foreign Affairs spokesperson also gave assurance that Australian consular officers in Guangzhou had already established contact with Mr Ng as early as November 18, who is also a long-time China resident, and gave assurance that development of the incident would be closely monitored to ensure the welfare of the Australian national.

Prior to his arrest, Mr Ng, who also worked as an investment banker for Commonwealth Bank of Australia, had flagged the possibility of a fraud incident in Et-China, announcing earlier this year that the company had discovered mischief allegedly committed by an employee.

If proven guilty after the ongoing investigation, Mr Ng's case could be the second conviction case for Australian nationals in China this year following the earlier sentencing of Rio Tinto executive Stern Hu, who is now being held in a Shanghai prison to serve an 11-year bribery sentence.