Political sensitivity is key to doing business in China

January 26, 2018 10:17
Marriot Group faced a backlash from Chinese authorities after the hotel chain inadvertently referred to Taiwan, Hong Kong, Macau and Tibet as 'countries' in some communication. Photo: JW Marriott

In the past, mainland officialdom would often go easy on foreign investors and companies even when they violated the Communist Party’s political taboos as long as they didn't do so on purpose.

However, as China is becoming increasingly powerful and cash-flush these days, it is showing lesser leniency on acts of "political incorrectness" by foreign businesses even if such acts are committed either inadvertently or accidentally.

In particular, Beijing’s tolerance towards "politically incorrect mistakes" over the critical issues of national unification and territorial integrity has been continually on the decrease.

One only needs to look at some high-profile incidents lately to gauge how easily upset the Chinese authorities become nowadays over political taboos concerning the national unification issue.

One of the incidents involved the JW Marriott Group, which has recently been given a very hard time by the mainland government for having mistakenly referred to Hong Kong, Macau, Taiwan and Tibet as "countries".

The group currently operates more than 100 hotels across the mainland. After it was caught red-handed categorizing the above-mentioned regions as "countries", the US-based group has so far issued four public apologies, and has vowed to fully respect China’s sovereignty and territorial integrity.

Yet it appears the hotel chain's apologies were of little help in allaying the anger of mainland consumers. Also, a number of leading mainland companies cancelled their reservations for holding their annual seminars with hotels run by the Marriott Group, not to mention that many of its outlets have also been removed from popular hotel booking websites in China.

Apart from the JW Marriott Group, other global top brands such as fashion giant ZARA, medical equipment manufacturer Medtronic and Delta Airlines have all been raked over the coals by Chinese authorities and ordered to reflect on their mistakes as well as apologize in public after they had "mistakenly" listed Taiwan as a "country" on their official websites.

Under most circumstances, big multinational companies can often ride it out as long as they don’t make the same mistakes again, and their size can allow them to bear the losses which they suffer as a result of punishment for their "wrongdoings".

Unfortunately, that is not the case when it comes to Taiwanese small companies specializing in exports to the mainland. Such firms often find themselves devastated or even forced out of business by the severe punishments imposed on them by mainland authorities for making similar mistakes.

For instance, in recent weeks many food products imported from Taiwan have been confiscated and destroyed by mainland customs officials simply because the Taiwanese exporters had put "Chinese Taiwan", rather than "the region of Taiwan" or "the Chinese region of Taiwan", as the place of origin on the product labels.

To reprint the labels and repack, it could easily cost NT$3 to 4 million (or roughly HK$800,000 to 1.06 million) each time. To many small businesses in Taiwan, it is a lot of money.

When Ma Ying-jeou of the Kuomintang was in office as president in Taiwan, cross-strait relations were much warmer. Under that relatively relaxed atmosphere, mainland authorities would often look the other way over the "place of origin" issue concerning food products imported from Taiwan.

However, as Beijing-Taipei ties have deteriorated ever since Tsai Ing-wen of the Democratic Progressive Party took power in 2016, Taiwanese food exporters have found themselves increasingly penalized, as their products are now subject to unreasonably rigorous scrutiny by the mainland authorities.

As a matter of fact, many foreign investors or business owners just can’t tell the slight difference among the terms "China" and "Mainland China"; and between "Taiwan” and "Chinese Taipei". Nor do they understand why "China" and "Taiwan", or "China" and "Hong Kong" can’t be used alongside each other on equal footing.

However, having learned the latest painful lesson, I guess foreign businessmen who are making money in China would be forced to become more politically sensitive and cautious in the days ahead, particularly on issues involving the political status of Taiwan, Hong Kong and Tibet.

That said, Beijing should also avoid blowing things out of proportion and be more inclusive towards foreign businesses, or else its heavy-handed approach may provoke a backlash among overseas investors.

This article appeared in the Hong Kong Economic Journal on Jan 20

Translation by Alan Lee

[Chinese version 中文版]

– Contact us at [email protected]


Hong Kong Economic Journal contributor