/Handling China’s Territorial Sensitivities as a Foreign Company

Handling China’s Territorial Sensitivities as a Foreign Company

China has begun showing considerably less leniency towards foreign companies over violations of Chinese “political correctness” than it has in the past. When companies refer to territories, over which China claims sovereignty, as separate countries, they risk jeopardizing their business survival in China.  Their business can be affected either through Chinese government retaliation or boycotts from the Chinese public.

This is a piece of a much larger strategy on the part of the Chinese government to leverage its economy to achieve political ends.  China has a long history of withholding market access in response to what it deems are political transgressions. For example, when Norway awarded the Nobel prize to Chinese political scientist Liu Xiaobo, the Chinese government responded by halting imports of Norwegian salmon. In another example, China halted the exports of rare earth minerals to Japan over a territorial dispute which threatened to cripple Japanese high-technology sector overnight.

However, even without government retaliation, ignoring Chinese norms of political correctness can be a costly mistake for foreign companies. Chinese consumers are often fiercely nationalistic and a perception that your company does not respect the political interests of the Chinese government can be fatal for your business (with both consumer and enterprise clientele).  For instance, when the JW Marriot Group was found to list Chinese-claimed territories as “countries”, a number of major Chinese companies cancelled their annual seminars at JW Marriott hotels in China. Additionally, some of its properties were removed from major hotel booking sites in China. Or, when tensions heat up between China and Japan or South Korea, Chinese consumers will boycott Japanese and Korean companies to demonstrate their patriotism.  These boycotts can be especially damaging because they are spread via online activists.

Notable Incidents

In 2016, JW Marriot Group referred to Hong Kong, Macau, Tibet, and Taiwan as “countries” on a survey given to customers. With 100 hotels in mainland China, the group quickly gave in and issued four public apologies.  These apologies and a pledge to follow the rules in the future were insufficient in halting a Chinese consumer and enterprise boycott of the hotel chain. The Chinese government also took the liberty of suspending the hotel chain’s Chinese website for a week.[1]

More recently, the Civil Aviation Administration of China (CAAC) issued a statement ordering foreign airline companies to list Taiwan as a part of China.  The administration gave more than 40 airlines a deadline for compliance of May 25th.[2]  Quantas Airlines recently issued a public statement offering their acquiescence to the CAACs demands.

Chinese authorities across the government can be particularly aggressive in enforcing territorial political correctness. In one instance, imported goods from Taiwan were destroyed by customs officials because the place of origin was labelled “Chinese Taiwan”.[3]

How to Protect Your Company

Listing Regions Appropriately

Though most regard China’s self-governing regions (Taiwan, HK, and Macau) as distinct (though not necessarily separate) from mainland China, it is critical to explicitly list these regions as a part of China on any materials that will be seen by the general public or the Chinese authorities.  The best way to signal compliance is to put “, China” after the name of any city. For example, Taipei in Taiwan should be listed as “Taipei, Taiwan, China”. Companies should also avoid listing Taiwan as a part of the Republic of China (ROC), despite the fact that Taiwan is governed as the ROC.  Companies operating within China would win favor with the local population by including the 9-dash line on any global maps, demonstrating China’s sovereignty over the South China Sea.

Cover Your Global Operations

The best way to minimize the risk of offending the Chinese government over territorial sensitivities is to ensure that your worldwide operations conform to Chinese naming standards.  This is a particularly wise step for companies that are heavily reliant on business in mainland China. For example, if a company adjusts their Chinese website to list Taiwan as part of China, but inadvertently implies that Taiwan is a separate country on it’s overseas website, they still risk upsetting authorities in China.

Marketing Materials, Labels, and Packaging

Marketing materials and any information distributed to the public or prospective customers should explicitly regard Taiwan, Hong Kong, Macau, and Tibet as regions of China. Businesses should screen their websites and promotional materials for any missteps regarding the naming of territories claimed by China.  For Marriott hotels, their controversy began with a customer survey. Their story shows that materials as seemingly innocuous as a questionnaire are not too small to ignore.

Packages should always list Hong Kong, Macau, and Taiwan as a part of China.  Companies should adjust their labelling practices immediately to avoid the risk of confiscation or destruction by Chinese customs authorities.

Conclusion

Many businesses are understandably reticent to bow to the Chinese government’s political correctness demands.  Doing so might portray lack of integrity and could harm their business in other markets (such as Taiwan). Businesses will need to make the critical decision regarding to what extent they will adjust themselves to appease the authorities.  Nonetheless, companies should not underestimate the sensitivity of these issues to the Chinese authorities. The Chinese government’s crackdown on business compliance in this area coincides with an increasingly assertive China on the global stage and a tightening state grip on society.  There is high-level government coordination to ensure that businesses bow to their political correctness demands. This underscores the government’s newfound commitment to ensuring that business and politics “harmonize” with one another.

 

[1] See https://www.reuters.com/article/us-china-delta/china-cracks-down-on-foreign-companies-calling-taiwan-other-regions-countries-idUSKBN1F10RC

[2] See https://www.theguardian.com/world/2018/jun/05/julie-bishop-qantas-china-taiwan

[3] See http://www.ejinsight.com/20180126-political-sensitivity-is-key-to-doing-business-in-china/

 

2018-06-14T14:31:33+00:00 June 14th, 2018|

Leave A Comment

Contact Us