NBA row heightens foreign companies’ fears they could cross China’s ever-shifting red lines as fallout from Rockets GM’s Hong Kong protest tweet continues

Keegan Elmer

As the row in China over the NBA continues to rage, foreign businesses in the country are becoming increasingly concerned that they will fall afoul of Beijing’s hardening political line.

Businesses have long been vulnerable to boycotts from Chinese consumers if they become embroiled in controversy – which could range from anything from a dispute about the country’s territorial integrity to adverts seen as racist – but the fallout from the NBA row has heightened their concerns.

Steve Dickinson, a lawyer helping multinationals working in China, said his clients were increasingly nervous about crossing Beijing’s often unpredictable red lines.

“How can you tell thousands of employees that they’re not allowed to post something online. Nobody knows what will set them off, and that is a severe problem,” he said. “You never know what the Chinese government is going to get angry about.”

He said companies would never “do anything intentionally, but use the wrong name or word, and now you’re in incredible trouble”.

The controversy over the NBA started on Saturday, when Houston Rockets general manager Daryl Morey tweeted an image that included the words “Fight for freedom. Stand with Hong Kong”.

Even though Morey deleted the tweets hours later, and the NBA said it was “regrettable” that he had deeply offended China, mainland online users and state media responded with outrage, saying that Morey had challenged China’s sovereignty and argued his tweet did not fall within the scope of freedom of speech.

Use the wrong name or word, and now you’re in incredible trouble

Steve Dickinson

Michael Roth, the chief executive of the global marketing company IPG, told the industry publication Campaign on Thursday that increasing levels of nationalism and protectionism were worrying.

“I’m concerned about China, and it’s not just because of the tariffs issue,” he said. “This whole move to nationalism and protectionism is a worry. But it’s such an important market that we have to be there and we have to service our clients.”

Other players in the sports industry said they hoped the NBA could get back to business.

“We hope for the sake of the game the NBA is able to resolve the current situation,” said Matthew Beyer, chief executive officer of East Asia Super League, which organises off-season basketball tournaments for Asian teams.

The NBA has extensive ties with China and last year league deputy commissioner Mark Tatum told Forbes that NBA China had a value of more than US$4 billion.

In July the NBA signed a five-year deal with Tencent to expand services to the 490 million fans that the tech giant said watched games on its platforms.

But Tencent, along with other partners like travel company Ctrip and tech company Vivo, has cut ties with the league since the Rockets controversy.

Chinese basketball sponsors’ shares gain from row with NBA

Dickinson said he advised clients to exercise “extreme care” when managing sensitive issues in China. “If you think you don’t have to, you’re making a mistake,” he said.

“Nobody wants to talk about this stuff. The hysteria has gotten so high that nobody wants to talk about it,” he said. “This is a new thing, this behaviour pattern.”

On Tuesday global fashion brand Tiffany pulled an advertisement that had been seen as supporting the Hong Kong protests even though it had been produced before the first mass demonstrations in June.

It featured a photograph, taken in May, of the Chinese model Sun Feifei covering her eye.

Some mainland internet users accused the brand of supporting Hong Kong protesters, who began covering their right eyes in protest against the police’s use of force after a young woman suffered a serious eye injury during a demonstration.

“My clients are deeply concerned,” said Dickinson. “With a lot of my clients, what they are saying is: ‘Why should I put a bunch of effort into building a business in China when it could be wiped out instantly for some reason we have no control over?’”

American airlines and other carriers were told to change their references to Taiwan on their websites. Photo: AP

Nick Marro, an analyst at the Economist Intelligence Unit in Hong Kong, said China had a history of demanding foreign firms comply with its political positions, but this summer’s situation in Hong Kong had brought Beijing’s sensitivities to a new level.

“If you think about the foreign investment climate over the past few years, we’ve seen China adopt an increasingly aggressive stance towards political correctness,” he said, on territorial issues like Taiwan, or offending the country’s image.

Chinese e-commerce platforms block Houston Rockets’ merchandise

The issue of Taiwan, which Beijing considers a breakaway province, has landed major airlines in hot water. Many American and other foreign carriers bowed to China’s demands last year and changed the way they referred to Taiwan on their websites.

American Airlines now lists Taiwanese destinations as being in China, while others like United Airlines began referring to it by its currency, the New Taiwan Dollar, to work around Beijing’s demands.

Meanwhile Dolce & Gabbana saw sales hit after an advert that showed a model eating Italian food with chopsticks and leaked comments from one of the company’s founders prompted accusations of racism and forced it to apologise.

“In the past, companies that offended China would experience a few months where things were very uncomfortable, until things were smoothed over,” Marro said.

“With Hong Kong, the issue is much more part of the mainstream discussion, and companies may start feeling more pressure in their domestic markets to take a position.”

On Tuesday a group of employees at the gaming giant Blizzard walked out in protest of their company’s handling of a Hong Kong-based gamer, Chung Ng Wai, who expressed support for the city’s protesters after winning a Hearthstone tournament, a game owned by Blizzard.

The Hong Kong protests have heightened the mainland’s sensitivities. Photo: Winson Wong

Chung was banned from playing for a year and stripped of his prize money – a decision that provoked a backlash among gamers in other parts of the world.

“Now that this awareness of China forcing foreign brands to kowtow is entering back into these companies’ home markets, that’s going to change the conversation,” said Marro.

Laure de Carayon, the chief executive of China Connect, a European-based digital hub that focuses on Chinese digital trends and marketing, said one of the best long-standing strategies was for foreign brands to work closely with local teams in China.

“They are the ones in the know about local Chinese culture,” she added.

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