Friday, October 11, 2019
Political Disruption brings you insights on how the fast-changing global political environment is creating a political disruption of business.
This week we focus on how China is using its market as a political weapon.
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Welcome to a new week of Political Disruption!
Andray Blatche shoots over the Chinese (now former) Houston Rockets player Yao Ming.
What happened? Last week China added a new scalp to its belt. The NBA hurried to apologize to China because one of its members, Daryl Morey manager of the Houston Rockets, tweeted an image supporting protesters in Hong Kong. The tweet was quickly removed.
The NBA apologized quickly but it did it differently in English than in Mandarin. In English they stated they recognized:
"that the views expressed by Houston Rockets General Manager Daryl Morey have deeply offended many of our friends and fans in China, which is regrettable,”
But in the Chinese version they went much further and recognized that support for democracy protesters is really inappropriate:
“We feel greatly disappointed at Houston Rockets’ GM Daryl Morey’s inappropriate speech, which is regrettable. Without a doubt, he has deeply offended many Chinese basketball fans."
Too late? But the NBA’s kowtowing to the Chinese seemed to have come too late. Chinese firms (sportswear brand Li-Ning and Shanghai Pudong Development Bank) halted their cooperation with the Houston Rockets as did the Chinese Basketball Association. Chinese tech-giant Tencent also suspended all streaming of Rockets’ games. The Houston Rockets were very popular in China because a few years ago they fielded a Chinese player Yao Ming (see picture).
Why does the NBA care about China? Almost 500 million Chinese watched American basketball through Tencent platforms last year. In July this year the NBA and Tencent concluded a streaming deal worth billions of dollars.
Is this a new Chinese strategy? China has weaponised its market for political gain in the past multiple times. And Western firms have been apologizing to the Chinese for a while. A few examples:
American airlines have already changed their naming of Taiwan on their Websites and publications to get the Chinese of their back. They changed the name 'Taiwan' to 'Taiwan, China' on their websites, thus confirming the one-China policy against the claims of an independent Taiwan. The Chinese government had threatened to deny access to Chinese airspace to the airlines that did not adapt.
The clothing retailer GAP apologised for an 'incorrect' map on one of their T-shirts. They used a map from China without Taiwan.
The American hotel giant Marriot International was also forced to take its website and mobile app offline after a survey had listed Hong Kong, Taiwan, Tibet and Macau as separate countries.
The power of the market. According to Bloomberg, China became the biggest retail market in the world in 2017 and this gives the Chinese government enormous power to push multinational firms that need its market to avoid any action that could offend the government. The most sensitive issues have been:
Anything related to the rule of the CCP
Any questioning of the territorial integrity of China (including Tibet, Taiwan, Macau and Hong Kong)
We can expect other firms to avoid hurting the feelings of the CCP and be less brave than Mr Morey (initially) was in standing up for their values. But this kowtowing to the Chinese might become less popular at home in the US where criticizing China is one of the few things that can get bipartisan support nowadays.