Bottom Line Up Front
- Beijing is hyper-sensitive to public criticism and does not hesitate to use its economic power for leverage in silencing companies, universities, and governments.
- In early October, the general manager of the NBA’s Houston Rockets tweeted support for protesters in Hong Kong, leading to an immediate backlash and the NBA’s capitulation in the face of pressure from the Chinese Communist Party.
- Some companies have decided that the capricious application of the ‘rule of ‘law’ in China makes investments in one of the world’s largest economies too risky.
- Most companies have decided that the financial gain of operating in or with China outweighs any ethical or moral concerns over censorship and thus continue to work with the authoritarian government.
As the protests in Hong Kong continue to evolve from outrage over an extradition bill with mainland China to a broader critique of Beijing’s authoritarian rule, the Chinese Communist Party (CCP) is assuming a hardline posture approach with all entities, including private sector companies, that are critical of China. Beijing has consistently pressured companies over issues such as its insistence that Taiwan is not a sovereign country but rather a renegade Chinese province, or any support expressed for the Dali Lama of Tibet. But the recent protests in Hong Kong have seen an increase in Chinese pressure on international corporations. Beijing is hyper-sensitive to public criticism and does not hesitate to use its economic power for leverage in silencing companies, universities, and governments. An example is the muted discussion about the egregious human rights abuses of ethnic Uighurs, a mostly Muslim minority group, in Xinjiang Province. Reports indicate that more than one million Uighurs have been arbitrarily detained under a years-long campaign by Beijing to erase any culture or religion that might compete with loyalty to the state. While some governments have spoken out, most have refrained from commenting, largely for fear of jeopardizing Chinese loans or investments in infrastructure in their respective countries.
In early October, Daryl Morey, the general manager of the National Basketball Association’s (NBA) Houston Rockets tweeted support for the protesters in Hong Kong. This single tweet led to an immediate Chinese backlash. Within days, China, which has substantial financial ties with the NBA, suspended investments and sponsorships while canceling scheduled games on television. The NBA issued a fulsome apology and several high-profile players expressed their ‘love’ for China. Companies like Versace, Apple, and Delta have all run afoul of Chinese sensitivities—over t-shirts saying Hong Kong is a country or airline maps listing Taiwan as a country and not part of China—and all have made public apologies to Beijing and made the requested changes or deletions.
Some companies have decided that the capricious nature of the ‘rule of law’ in China makes investments in one of the world’s largest economies too risky, since Beijing can simply end partnerships or rescind investments at any time. Others have decided that Chinese demands to censor their products are anathema to their company’s business ethics. Google stopped its operations in China after growing frustrated with Beijing’s constant censoring of its search engine. But most companies have decided that the financial gain of operating in or with China outweighs any ethical or moral concerns over censorship and thus continue to work with the authoritarian government.
The ongoing Hong Kong protests are the most significant challenge to the unquestioned rule by China’s Communist Party since the 1989 student pro-democracy protests in Tiananmen Square. China has not yet brought the full weight of its military to crush the protests and the overall movement of dissent in Hong Kong, as it did in Tiananmen Square three decades ago. But if protests continue, the Chinese government could very well unleash its security forces in a more heavy-handed manner. If Beijing uses its military to stifle the protest movement, it will likely face substantial international condemnation but many governments and corporations won’t go beyond words as they consider Hong Kong an ‘internal matter’ for China to handle and use sovereignty as an excuse to continue business and financial relationships at all costs.