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Knowledge of Chinese politics: an essential factor of a commercial success

[Update of this article on September 4, 2019]

Since February 2019, increasingly heated uprisings between the Hong Kong people and his government threaten Hong Kong’s balance. As a reminder, this former British colony was surrendered to mainland China by the United Kingdom in 1997 and obtained the status of “special administrative region” until 2047. This status allows it to have a separate judicial system from Beijing and stay much more liberal.

What’s happening in Hong Kong?

A new controversial bill

When the Hong Kong government announces a bill allowing the extradition of “offenders” residing in Hong Kong or being only passing through, the population sees a danger for political or religious dissidents refugees in this part of the territory.

Indeed, this project instigated by the Beijing government would allow him to determine a “criminal” behavior, according to his own criteria and not those of the peninsula. Chinese justice being particularly opaque and subject to the communist regime, it would allow the central government to extradite many Hong Kong residents. The direct consequence would be an attack on the sovereignty of the territory and a strengthening of China’s control over its various political and judicial bodies.

The revolt of the young, pro-democratic generations

Soon, young militants stormed the streets of Hong Kong. With a pro-democracy orientation, they demand a withdrawal of the bill, as well as the right to universal suffrage to elect the chief executive. But Beijing chose and imposed the current head, Carrie LAM. Faced with the powerlessness of the Hong Kong government in the face of these demonstrations, the central government has undertaken several demonstrations of force to discourage protesters. Power is also gradually putting pressure on different business entities to reduce international support for Hong Kong.

Demonstration of strength of the Chinese army in Hong Kong on June 30, 2019. Damir Sagolj / REUTERS.

What are the consequences for international trade?

These political facts have a direct impact on business activities, both in China and internationally.

The case of Cathay Pacific

The British airline was first called to order by Beijing following its support for the movement. However, although the management of Cathay Pacific has announced the end of its support for the demonstrations, it has not been able to stem the initiatives of its employees. Following this, the general manager of the group Rupert Hogg, then its president John Slosar resigned.

An initiative moved from a CoCo employee to Hong Kong

CoCo Bubble Tea is one of the most renowned brands in China. Specializing in the manufacture of milk tea, it is a Taiwanese brand with banners in Taiwan, Mainland China and Hong Kong. A Hong Kong brand teahouse took the initiative to add a personal message on the receipt of its customers: “香港人 加油”, literally, “courage to the Hong Kong people”. Although this is an isolated initiative, the distribution of photos of these receipts on the web has damaged the image of the brand. Although it has not been sanctioned by the Chinese government for the moment, many “mainlanders” (Chinese mainlanders) have called for his boycott and have deserted his salons.

Receipt of the CoCo sign to a customer with the mention “Hong Kong Courage” broadcast on Weibo.

Early withdrawal of moon cakes from Taipan Bread and Cake

The Hong Kong brands do not suffer sanctions or reminders to the order of the government as long as none of their employees is involved in these pro-democratic movements. However, the case of the brand Taipan Bread and Cake has shown that it no longer concerns only employees of the company but also the personal circle of its leaders.

Indeed, Garic Kwok, the son of the founder of the company, was reported to the Chinese authorities. The latter has broadcast messages of support to the Hong Kong movement on his personal Facebook page.

Following this, the brand’s products, mainly moon cakes at this time of the year, have been removed from the JD.com and Tmall.com merchant sites, as well as many superstores in Beijing, Shanghai, Guangzhou and Guangdong. Shenzhen. At present, no press release to deliver these products has been released. What’s more, Internet users have rejected Gary Kwok’s public apology and called for a boycott of the brand.

“Snowy mooncake” is the brand’s flagship product and was removed from many shelves just weeks before the famous Moon Festival.

What precautions should be taken?

The conflict between Communist Mainland China and its pro-democracy peninsula is just one example. It illustrates the impact of China’s domestic politics at the international level. In the past, similar cases have been reported about Taiwan (removal of its name from “country” on travel sites), Tibet and repression of the country’s Uyghur minority.

To prevent this political dissension from impacting the economy of a company, we strongly recommend that you carefully monitor any Chinese political change and any conflict between China, its autonomous regions and other countries. An awareness of the company’s subsidiaries (both managers and all employees) at the national and international levels is also necessary. The aim is to reduce the risk of behavior considered as “delinquents” by the Chinese government (see the case of the CoCo Bubble Tea brand).

The most neutral communication possible during periods of political tension is a major asset for any activity related to the Middle Kingdom.

Our team consists of watch specialists with skills in different geographical areas. You want to better prepare your communication to China? Do not hesitate to ask us for advice!