American companies eager to expand overseas are proceeding with caution when it comes to Beijing.
At the crux of complaints from the Chinese government against U.S. entities, including the NBA, Tiffany’s, Blizzard Entertainment, and Apple, has been support for, whether perceived or overt, the protest movement in Hong Kong that began in June in opposition to a bill allowing extraditions to China.
But in the face of pressure from Beijing, many corporations have chosen to distance themselves from any notion of support for the ongoing demonstrations in the semi-autonomous territory rather than risk being closed off from the world’s second-largest economy and China’s population of 1.4 billion people.
“The fear is that they’re going to lose the China market,” said Michael Auslin, a fellow at the Hoover Institution at Stanford University, of the U.S. firms. “It’s all about the money.”
The tensions between the NBA and China have emerged as a flashpoint in Beijing’s ongoing efforts to exercise control over western companies.
The controversy began this month when Houston Rockets General Manager Daryl Morey said in a since-deleted tweet “Fight for Freedom. Stand with Hong Kong.” Morey’s message ignited a furious backlash from Beijing as league officials and players headed to China for a pair of preseason games: the Chinese Basketball Association severed ties with the Rockets; China’s state-run broadcaster said it wouldn’t show the match-ups between the Los Angeles Lakers and the Brooklyn Nets played in Shanghai and Shenzhen, and Chinese sponsors distanced themselves from the NBA.
The league released a statement in response to Morey’s tweet, saying the message “deeply offended many of our friends and fans in China, which is regrettable.” But the NBA’s statement was met with pushback from Republicans and Democrats alike, who accused the league of prioritizing profits over human rights, including freedom of speech.
To mitigate the damage, NBA Commissioner Adam Silver issued a second statement saying the league wouldn’t “put itself in a position of regulating what players, employees, and team owners say or will not say.”
But players and team owners have continued to reignite the scandal, including star LeBron James, who said Morey “was either misinformed or not really educated” on the situation in Hong Kong.
The spat between the NBA and China underscores the potential pitfalls that await companies choosing to do business in a country that seeks to exert power beyond its borders.
“China engages not in whole of government, but whole of society — information warfare, political pressure,” said Dean Cheng, a research fellow at the conservative Heritage Foundation who focuses on Chinese political and security affairs. “It’s very clearly trying to massage, trying to shape not only foreign views of China but what foreigners will find acceptable to say about China.”
By contrast, the United States employs persuasion, he added, but “doesn’t demand sovereignty over your individual beliefs.”
“What China is demonstrating is there is nowhere that is beyond the reach of the Chinese view and the Chinese Communist Party,” Cheng said.
The NBA is only the most recent in a growing list of U.S. entities that have landed at a crossroads between access to China’s market and America’s democratic values.
Blizzard Entertainment, the video game developer behind World of Warcraft, suspended Hong Kong-based professional gamer Ng Wai Chung, who goes by Blitzchung, and stripped him of his prize money after Blitzchung made a statement in support of Hong Kong protesters.
The decision, as with the NBA, prompted a backlash from other gamers and lawmakers, and the company backtracked on Blitzchung’s punishment last week. They reduced the suspension to six months and returned the prize money.
Some of the country’s biggest tech firms, however, have not reversed course in the face of criticism from China.
Apple removed from its app store an app called HKmap.live, which allowed Hong Kong protesters to track the movement of police. The decision came after the People’s Daily, the mouthpiece of the Chinese Communist Party, condemned the tech giant for making the app available for download. In defending the decision to remove HKmap.live from the app store, Apple CEO Tim Cook told employees it violated Hong Kong laws and Apple’s guidelines.
Google, too, pulled from its Google Play store a mobile game, called The Revolution of Our Times, that allowed players to act as a Hong Kong protester. The company said the game violated Google’s policies for “sensitive events.”
And the Hong Kong protest movement is not the only issue that has raised China’s ire. Delta Air Lines last year apologized after listing Taiwan and Tibet as countries on its website, and Marriott International issued an apology after listing Taiwan, Tibet, and Hong Kong as separate countries on a customer survey.
Sen. Ben Sasse of Nebraska, who has issued forceful warnings to U.S. firms that have come under pressure by the Chinese government, said many companies are “prioritizing access to Chinese markets over upholding basic American ideals.”
“Let’s be clear-eyed about the moment we’re in: Chinese techno-authoritarianism is waging war against American democracy. Chicoms are trampling on human dignity, and way too many folks in American C-suites are satisfied to just sit on the sidelines as long as they can cash the commie checks,” Sasse said in a statement to the Washington Examiner, adding that Americans “need to stop letting these communist tyrants co-opt our businesses.”
“No profit is more important than the truth,” he said. “Americans aren’t going to pass freedom onto the next generation if we lose our souls to make a couple of bucks. American consumers need to demand more of our American businesses.”
Auslin said the most recent moves from American companies show they’re “willing to bend the knee” to China to protect their business interests.
“They’ve all crumbled because they’re afraid of losing money,” Auslin said. “But the point is China is never satisfied. China is never sated by the groveling of an American company.”
Apple relies heavily on China as a manufacturing base and makes nearly all of its products there. For the nine months ending June 29, the Cupertino, California-based company reported $32.5 billion in sales in the greater China region, which includes mainland China, Hong Kong, and Taiwan.
While China’s efforts to pressure American corporations aren’t necessarily new, Auslin said Beijing appears to be more emboldened and believes it can “bully and dominate” the firms.
“No country has ever had the temerity and the gall to try to force foreign companies and foreign individuals to adopt their view of the world and their ideology at the risk of not being able to participate in the market,” he said.
Paul Argenti, a professor of corporate communication at Dartmouth College’s Tuck School of Business, said companies looking to do business in China should be aware of how to handle fallout similar to what the NBA is experiencing now.
“A lot of companies are blindsided or living in a dream world,” he said. “China is not a democracy. It’s not like the United States, and we shouldn’t expect them to be like us.”
But he also warned that those who decide to set aside the potential risks in favor of China’s market should be prepared for a “day of reckoning if they start backing away from what are American ideals.”
“Are you willing to go to the mat to do business in China?” Argenti said. “Companies try to walk that fine line and thread the needle between what’s important for them in terms of profits and what’s important for them in terms of what they believe in values.”
