As anti-government protests in Hong Kong intensified this month, KPMG issued a directive to its employees in the territory: Do not speak on behalf of the company in public. It went on to say that the firm supports China’s policy for governing Hong Kong.
PricewaterhouseCoopers (PwC), another Big Four accounting giant, sent a similar message to staff telling them to avoid disclosing anything about the company on social media platforms, according to e-mails seen by Bloomberg.
This is the new reality for multinational businesses that have long grappled with a thorny question on China: What is the price of access to Asia’s biggest economy? Beijing’s response to the protests, most notably its clampdown on Cathay Pacific Airways this month, has provided one answer: compliance with the Chinese Communist Party’s world view, from senior management on down.
Illustration: Yusha
“The Chinese government doesn’t see business as being separate from the state and it has made it clear that if you want to do business in China, you’d better toe the line,” said Steve Vickers, chief executive officer of political and corporate risk consultancy Steve Vickers & Associates, and the former head of the Royal Hong Kong Police Criminal Intelligence Bureau.
PwC said in an Aug. 5 statement that it fully respects people’s right to freedom of speech, but regrets the escalation of violence related to the protests.
The firm also condemned “the use of social media to spread false messages using the firm’s corporate identity” that it said were designed to mislead the public.
KPMG on Thursday e-mailed its Hong Kong staff reminding them not to engage in unlawful acts whether they are at work or not and to refrain from speaking to the media without prior approval, according to a copy of the message seen by Bloomberg.
KPMG did not immediately respond to a request for comment.
Cathay, Hong Kong’s flagship airline, has become a symbol of what happens when a company is judged to have crossed China’s red lines.
After some of Cathay’s staff came out in support of the Hong Kong protests, state-backed firms imposed boycotts on the airline and Chinese regulators threatened to block its access to Chinese airspace.
Within days, Cathay’s chief executive resigned and the company acceded to a list of Beijing’s demands. At least three pilots have also left, one after he reportedly made comments about the protests to passengers on a flight to Hong Kong from Tokyo.
Few corporate targets are as big as Cathay, a Hong Kong icon whose business would be crippled if it lost access to China. Yet scores of other international companies — from automakers to fashion brands to banks — could easily find themselves in a similar position.
HSBC Holdings is a prime example. Founded in Hong Kong in 1865, the bank switched its base to London before the handover to China in 1997, yet still generates half its revenue in Asia, including China.
On the protests, the bank has so far appeared unwilling to rein in its workforce, which stood at 238,000 full-time employees in June. According to the Financial Times, HSBC managers allowed staff in Hong Kong to attend a mid-week demonstration in June, as long as they did not break the law.
“The bank has always respected our employees have their own personal views on political and social matters,” HSBC said in an e-mail.
That could be a risky stance. A cornerstone of HSBC’s strategy has been to leverage its foothold in Hong Kong to deepen its push into China, where it already offers corporate and retail banking services.
The bank took a clearer stance on Thursday. In an advertisement in the Chinese-language Hong Kong Economic Times, HSBC said the rule of law is indispensable for the territory.
“We are very concerned about the recent social events and strongly condemn any violence and actions that disrupt social order,” the bank said in its ad.
HSBC was already in an uncomfortable spot over Washington’s legal and political tussle with Chinese technology company Huawei Technologies, a major client of the bank. US prosecutors drew on HSBC’s relationship with Huawei to build its case against an executive at the telecommunications company, the Financial Times reported last month.
China has plenty of reasons to show restraint. The government’s pressure tactics could backfire if international companies decide to leave the mainland or Hong Kong, taking with them technical expertise and good-paying jobs. Anything that erodes Hong Kong’s status as a global financial center would also hurt Chinese companies that rely on the territory for offshore funding.
“This drives China straight toward what some US hawks seek: economic isolation,” said Victor Shih (史宗瀚), associate professor of political economy, and Ho Miu Lam chair in China and Pacific relations at the University of California, San Diego.
Even if the Chinese government eases up, international companies are unlikely to escape scrutiny from the country’s increasingly nationalistic online community.
Several global brands, from Versace to Calvin Klein, have apologized in after Chinese Internet users called them out for products and company Web sites that identified Hong Kong as a distinct country, rather than being part of China.
A senior executive with a European luxury brand, who asked not to be identified given the sensitivity of the subject, said the operating assumption for years has been to be careful with China and politics.
Brands carefully monitor the local response to marketing, the person said, and should be willing to cancel even high-budget initiatives if necessary.
In the high-end fashion world, star designers have long had freedom to push boundaries. Yet in the wake of an incident like Dolce & Gabbana’s chopstick debacle last year — in which the brand was scrubbed from Chinese e-commerce sites after posting videos of a clueless Chinese model trying to eat pizza and cannolis with chopsticks — even those rules are changing.
A top executive at a European luxury group, who also asked not to be identified, said they are now coaching designers to cleave closely to pre-approved messages.
Complying with China’s rules can be challenging, especially for companies with employees who might not agree with the party ideology. Yet businesses who want access to the US$14 trillion economy might not have a choice.
“I’m a democracy guy, but you have to face the current situation,” Vickers said. “I’m not saying it’s right or legal. I’m just saying that’s how it is.”
A series of strong earthquakes in Hualien County not only caused severe damage in Taiwan, but also revealed that China’s power has permeated everywhere. A Taiwanese woman posted on the Internet that she found clips of the earthquake — which were recorded by the security camera in her home — on the Chinese social media platform Xiaohongshu. It is spine-chilling that the problem might be because the security camera was manufactured in China. China has widely collected information, infringed upon public privacy and raised information security threats through various social media platforms, as well as telecommunication and security equipment. Several former TikTok employees revealed
For the incoming Administration of President-elect William Lai (賴清德), successfully deterring a Chinese Communist Party (CCP) attack or invasion of democratic Taiwan over his four-year term would be a clear victory. But it could also be a curse, because during those four years the CCP’s People’s Liberation Army (PLA) will grow far stronger. As such, increased vigilance in Washington and Taipei will be needed to ensure that already multiplying CCP threat trends don’t overwhelm Taiwan, the United States, and their democratic allies. One CCP attempt to overwhelm was announced on April 19, 2024, namely that the PLA had erred in combining major missions
The Constitutional Court on Tuesday last week held a debate over the constitutionality of the death penalty. The issue of the retention or abolition of the death penalty often involves the conceptual aspects of social values and even religious philosophies. As it is written in The Federalist Papers by Alexander Hamilton, James Madison and John Jay, the government’s policy is often a choice between the lesser of two evils or the greater of two goods, and it is impossible to be perfect. Today’s controversy over the retention or abolition of the death penalty can be viewed in the same way. UNACCEPTABLE Viewing the
At the same time as more than 30 military aircraft were detected near Taiwan — one of the highest daily incursions this year — with some flying as close as 37 nautical miles (69kms) from the northern city of Keelung, China announced a limited and selected relaxation of restrictions on Taiwanese agricultural exports and tourism, upon receiving a Chinese Nationalist Party (KMT) delegation led by KMT legislative caucus whip Fu Kun-chi (傅崑萁). This demonstrates the two-faced gimmick of China’s “united front” strategy. Despite the strongest earthquake to hit the nation in 25 years striking Hualien on April 3, which caused