Freya Zemek | International Trade & Economy Fellow
Cracking the Chinese market is and should be a goal of any company. But in light of recent public controversies where foreign multinationals have bumped up against the sensitivities of the CCP and mainland Chinese loyalists, business leaders must go in with their eyes wide open.
This is easier said than done in Australia. The lucky country’s economic resilience over the past decade has hewed ever closer to the fortunes and tastes of China’s rapidly expanding middle class. But reliance on China is a double-edged sword, a fact that is most obvious in consumer goods sectors like tourism, entertainment and luxury consumables.
Foreign sports leagues have been the latest to fall foul of mainland Chinese audiences, investors and state-sponsored agencies. English Premier League team Arsenal, which boasts a 4.8 million Chinese following on Weibo, had their game against Manchester City pulled from TV broadcasts in China by CCTV after midfielder Mesut Özil took to Instagram to support China’s Uighur minority population.
And then there was the NBA, when Houston Rockets general manager Daryl Morey tweeted his support for anti-government protests in Hong Kong, sparking a firestorm of media blackouts, cancelled advertising and sponsorship deals, and grassroots boycotts of the entire NBA across large segments of Han Chinese basketball fans.
Hong Kong is only the latest flashpoint in a historically complex and often fraught relationship between Beijing and western corporations. In 2018, Qantas bowed to pressure from Beijing to change its website’s reference to Taiwan from a nation to a ‘territory’. In recent years, a similar thing has happened to several luxury brands hailing from Western Europe and the United States, where tensions between the meeting the expectations of domestic consumers and shareholders and the commercial imperative to appease the Chinese market are increasingly apparent.
When it comes to politically sensitive issues in China, corporate self-censorship – driven by perceived commercial necessity – is alive and well throughout the West, and is drawing the ire of legislators like outspoken US Republican Senator from Missouri, Josh Hawley.
A case in point was Apple’s decision in October – under pressure from Chinese state media – to remove the HKmap.live app that was allegedly helping pro-democracy protestors in Hong Kong to target police. The commercial stakes could not be higher, given China is Apple’s second largest market for smartphones at a time when global iPhone sales are declining year on year.
Is Australia immune? Not entirely. We may not have as many high profile MNCs as the United States, but with more and more Aussie businesses trying to tap into the Chinese market – not to mention the flood of Chinese international students and tourists reaching our shores and lifting our economy – the current domestic debate about whether Australian corporates should have a say on social issues needs to account for our global exposure.
The pattern is already playing out in the higher education sector. Australian universities, for which up to two-thirds of international students hail from the PRC, are open to repercussions as instances of pro-Hong Kong student activism on campus attract publicity and draw the ire of Beijing.
And while Australia’s high fashion industry may not hold a candle to its European and American counterparts in terms of Chinese market share, they are not the only sectoral players who need to tread carefully. Cotton On and Target Australia were unwittingly caught up in a public relations firestorm and compelled to change their supply chains when it emerged they were sourcing cotton from China’s Xinjiang province, where forced labour by Uighurs in textile factories is rife. And in December, a similar incident involving greeting cards sold by UK grocery outlet Tesco resulted in similar scrutiny of their supply chains.
Australian sports leagues may not do close to the scale of business enjoyed by Arsenal and the NBA, but sport is big business in China, and awareness of this lucrative market opportunity is growing. A number of Australian teams across multiple codes have Chinese sponsorship or investment, including the NRL’s Canberra Raiders who have a sponsorship deal with Huawei, and Port Adelaide club partnering with China’s state broadcaster CCTV in 2016 to broadcast AFL throughout China. Australia is no stranger to controversies involving sports stars and social media. But these may well turn out to be a drop in the ocean when compared to strains of balancing dependence on China and political sensitivities.
Freya Zemek was the 2019 International Trade and Economy Fellow for Young Australians in International Affairs. The views expressed in this article are the author’s own, and do not necessarily reflect those of the Australian Government.