One kowtow is never enough

Stephen Vines June 12, 2020 12:09

The one thing that every bully knows is that once a victim has been cowed there is every reason to come back for more.

The Chinese government is an expert in refined bullying, with an acute sense of the defencelessness of its victims and a strong track record for piling on the pressure.

There is nothing Beijing enjoys more than intimidating overseas companies who conduct business either within its borders or want access to the Mainland market.

The reflex urge to bully came to the fore when Beijing decided to impose a national security law on Hong Kong and the Communist Party ordered a full mobilization to obtain backing for this decision.

Alongside the usual suspects, who spend their days eating Peking Duck, the Party wanted to secure visible support from the business community so that it could argue that the new law would be good for business. The biggest Hong Kong companies scrambled to obey and rapidly deluged newspapers with large paid-for announcements of support.

Foreign owned companies based in Hong Kong were slower to respond and naively hopped that they could somehow avoid getting involved in this kind of politics. HSBC learned that this was a costly mistake and was rapidly forced to kowtow with the deepest of bows. Other foreign owned companies, notably Standard Chartered Bank and the Jardine Matheson group, scrambled to fall into line.

Having seen how easy it was to bully these large corporations, the hard men in Beijing decided to keep piling on the pressure. On June 4th, the Global Times, Beijing’s attack dog newspaper, declared that HSBC’s kowtow had been too slow, quoting a ‘Chinese expert’ as saying “the bank's move should have come earlier, but can also be seen as a move "never too late" if the bank could follow its statement to the heart.”

Two days later the paper clarified what it deemed to be ‘a basic principle that businesses should stay away from political disputes as they have neither the ability nor the experience to handle the resulting situations. That principle applies to HSBC, which has put itself in an awkward position underscoring its lack of political wisdom. The bank is seen by some people in China as being untrustworthy due to its alleged involvement in Huawei executive Meng Wanzhou's arrest in Canada’.

Cathay Pacific Airways, controlled by the British based Swire group, learned an even more painful lesson last year when it was forced to replace a couple of top officials, sack dozens of employees and submit itself to extensive controls on flight crew entering Chinese flight space. Beijing lambasted the company for its lenient attitude towards staff participating in the protests. Swire’s top man scuttled up to Beijing to perform an extraordinary act of contrition.

What will happen now that Cathay’s business is so bad as to have forced it to seek a massive government bailout? One aspect of this deal, which gives the company a mixture of loans and capital, is that the two government ‘observers’ who have been installed on the airline’s board could be primarily engaged in political control, ensuring that Cathay becomes the meekest of supporters for whatever Beijing deems it necessary to support.

Cathay is particularly vulnerable because China can literally take away its business overnight and hand over control to the airline’s second biggest shareholder, the state controlled Air China. This will probably happen in the longer term but for new Beijing can keep the threat dangling so as to exercise absolute control.

What is more surprising is the alacrity of other large international companies that have allowed themselves to be bullied after ‘deeply insulting China’ with the slightest of provocations, ranging from ‘incorrectly’ stating Taiwan’s status as a country to comments made during the 2019 protests.
The list of those who have bowed to Chinese pressure is a who’s who of the world’s biggest companies, starting alphabetically with Apple, moving on to Audi, Disney, Google, the Marriott group, Mercedes, the NBA, Nike, plus a clutch of airlines. There are many names to be added, all of whom are petrified of losing business in China.

Why does China do this bullying? The reason is - because it can. What even these mighty companies fail to understand is the simple truth that bullies will keep upping their demands until someone stands up to them.

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Stephen Vines

Hong Kong-based journalist, broadcaster and book author. His latest book, Defying the Dragon – Hong Kong and the world’s largest dictatorship, will be published by Hurst Publishers in early 2021.