China's Way or the Highway: Big Business Bows to Xi's World View
Pedestrians walk past commercial buildings illuminated at dusk in the Lujiazui Financial District in Shanghai. (Photographer: Qilai Shen/Bloomberg)

China's Way or the Highway: Big Business Bows to Xi's World View

(Bloomberg) -- Multinational businesses keen for a slice of the world’s fastest-growing consumer market are finding they have to increasingly conform to China’s world view if they want to stay in Beijing’s good graces.

Companies from Marriott International Inc. to Qantas Airways Ltd. are scrambling to fall in line with China’s stance on the treatment of territorial disputes, or risk missing the biggest market opportunity some of them have ever known. In the past week, they have been checking the wording on websites and other material for references -- some of which have been in public view for years -- that might cause offense, while also offering apologies and acknowledgement of China’s sovereignty.

The state can quickly and easily punish defiant companies, said Stuart Orr, a professor at Deakin University’s faculty of business and law in Melbourne who has studied China for more than a decade. “I’m not aware of any industries that are so critical to China that China would feel the need to accommodate them,” Orr said. “I don’t think these companies really have a lot of leverage.”

China is demanding that international companies respect the government’s position on long-standing territorial disputes from Taiwan to Tibet. Australian airline Qantas, which flies to Beijing and Shanghai, said this week it had incorrectly listed on its website some Chinese territories as “countries” and the company was fixing the error. Delta Air Lines Inc., apparel maker Inditex SA and Marriott were singled out last week by Chinese authorities for similar transgressions.

Foreign corporations “should respect China’s sovereignty and territorial integrity, abide by China’s laws and respect Chinese people’s national feelings,” Foreign Ministry spokesman Lu Kang said during a Jan. 12 press conference. “This is the minimum requirement for any enterprise to invest, operate and conduct cooperation in another country.”

Keeping China happy can be a daunting exercise, as many companies are finding. Complying with a broad crackdown on the categorization of disputed lands would require trawling through decades of online archives for possible violations, even for companies that have sold goods and services in China for years.

A survey of some of the largest foreign companies doing business in China suggests many may have work to do if they want to fully comply with the government. Of the 10 biggest firms generating at least 20 percent of revenue from China and its territories, at least six describe Taiwan as a country on their websites, according to data compiled by Bloomberg. The references span press releases, careers pages, business overviews and technical support pages.

China claims democratic Taiwan as a province, even though the two sides have been ruled separately for almost 70 years. The former colonies of Hong Kong and Macau are special administrative regions, with greater control over local affairs. Tibet is an autonomous region, but home to a movement seeking an end to China’s “occupation.”

‘Inadvertent Error’

Companies say any infringements are simply oversights. Delta apologized for listing Tibet and Taiwan as nations and called it “an inadvertent error with no business or political intention.” Starbucks Corp., which opens a store in China every 15 hours, said that while its major websites “respectfully reflect” the Chinese territories, the company is updating some minor sites that were not accurate.

Bellamy’s Australia Ltd., the baby food maker that relies on China and Hong Kong for almost one third of its annual revenue, on Tuesday said it changed the reference to Hong Kong on its website, noting it took the action voluntarily.

In many cases, the violations involve lists showing where a company has operations or where an airline flies to. An aviation and travel boom across Asia has increased online exposure to territory categorizations that China won’t allow. The solution to such a problem can be as simple as changing a “Countries” heading to “Countries/Regions.”

Regional Status

The greater intolerance for slights regarding such territories mirrors China growing economic and geopolitical clout and President Xi Jinping’s tightening grip on power. Chinese leaders have expressed alarm over “separatist” movements after Taiwan elected a president from a pro-independence party and anti-China activists secured seats on Hong Kong’s legislature.

“We will never allow any person, any group, any political party, at any time, in any way, to split from any part of China’s territory,” Xi said in November 2016, according to the official Xinhua News Agency.

Political conflicts aren’t just restricted to territorial issues, as Marriott discovered this week even after apologizing for its website incident. It found itself in an awkward situation after being notified that one of its hotels in China displayed decorative copies of a book that alleges government abuse of the banned Falun Gong spiritual group. The hotel promptly removed the cardboard copies.

©2018 Bloomberg L.P.

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