US companies and executives are increasingly taking strong stances on local policy matters such as health care and gun control; however, until recently they had largely avoided scrutinising China’s position on free speech and human rights. As the Hong Kong protests enter their twentieth week, US businesses across a range of industries have found themselves caught up in the chaos. Following comments from various US representatives in support of the Hong Kong freedom fight, Chinese President Xi Jinping has warned that anyone trying to split any part of China will be “crushed.”
In light of the events, Perry Link’s 2002 article comparing China’s ruling Communist Party to an “anaconda in a chandelier” has recently resurfaced. Link argues that China’s censorship strategy allows each entity to make their own decisions (self-induced censorship), as the CCP lay dormant but always an intimidating presence:
“The Chinese government’s censorial authority in recent times has resembled not so much a man-eating tiger or fire-snorting dragon as a giant anaconda coiled in an overhead chandelier. Normally the great snake doesn’t move. It doesn’t have to. It feels no need to be clear about its prohibitions. Its constant silent message is ‘You yourself decide,’ after which, more often than not, everyone in its shadow makes his or her large and small adjustments—all quite ‘naturally.’ The Soviet Union, where Stalin’s notion of ‘engineering the soul’ was first pursued, in practice fell far short of what the Chinese Communists have achieved in psychological engineering.”
Apple is more exposed to the Chinese economy than any other US company. A vast majority of their products are manufactured in China, and the region comprises around 20% of their revenues. Apple may have a lot to lose by choosing the wrong side in a war that is not their own. Nonetheless, the company have made concessions to China in the past week to reinforce their relationship. Apple decided to remove app HKmap.live, which allows citizens to track groups of police and protest developments, claiming it could endanger law enforcement and Hong Kong residents. The app is still available on the Google Play store and on web browsers, making Apple’s decision more of a symbolic nod to Chinese authorities.
Similarly, Apple pulled news aggregator Quartz’s app from the Chinese app store because it “includes content that is illegal in China.” Quartz have been covering the Hong Kong protests. Moreover, the Taiwan flag emoji was removed in recently released iOS 13 for Hong Kong and Macau users.
Other US companies embroiled in the chaos include Viacom through its subsidiary Paramount, the NBA and Blizzard Entertainment after they banned an esports player for declaring “Liberate Hong Kong” in a mid-tournament interview. Meanwhile, Marriott, Gap and airlines American, United and Delta have all apologised for and revised their (mis)representations of the Greater China region, specifically for suggesting Taiwan was an independent country rather than a territory.
Likewise, Hollywood and foreign movie studios have been catering to China by censoring political red flags in their films. Most publicly, Paramount’s Top Gun sequel was backed and co-marketed by Chinese conglomerate Tencent. Tom Cruise’s character Maverick wears his iconic leather jacket, identical to his one in the original film, although notably missing large patches depicting Japanese and Taiwanese flags.
The NBA has rapidly grown in popularity in China since Yao Ming became a star at the Houston Rockets in 2002. Nearly 500 million Chinese people streamed NBA content in 2018, substantially more than the entire US population. Following the quickly deleted tweet from (ironically) Houston Rockets GM Daryl Morey in support of Hong Kong’s pro-democracy protests, the Chinese government, Chinese Basketball Association and various Chinese businesses all severed ties with the Rockets. A subsequent preseason NBA game played in Shanghai had corporate signage removed and was stripped of media availability. Tencent’s multi-billion dollar streaming deal with the NBA hung in the balance but has since been reinstated.
The opportunity in China’s giant and growing economy means many businesses cannot afford to awaken the anaconda of the CCP. Global companies prefer the “natural” self-induced censorship than face the prospect of making an enemy of China. Most parties have too much at stake to engage the situation as lightly as the South Park creators did when the satirical show’s 300th episode Band in China of course had the show banned in China.
Lachlan Mackay is a Research Analyst with Montaka Global Investments. To learn more about Montaka, please call +612 7202 0100.