Communists turn China into nightmare for American businesses


China was a land of opportunity when it welcomed American companies in the 1990s, but like so many naive business dreams under authoritarian states, doing business there has become a nightmare.

The market for President Xi Jinping and his communist regime is crystal clear. If a CEO is to gain access to consumers in the world’s second largest economy, he must accept totalitarianism and crimes against humanity.

If businesses are people too, how much does the devil pay for their souls? And why do the leaders think that the Chinese Communist Party will not come for them after all?

Executives are caught between Xi’s sensitivity to outside criticism and consumer activists. If a CEO agrees to boycott items made by forced labor in Xinjiang concentration camps, Chinese customers will boycott the retailer.

A visibly well-organized movement on social media is calling on the Chinese to boycott Walmart after the retailer reportedly stopped stocking Xinjiang products in Chinese cities. The company did not comment, but Wall Street Journal reporters found articles from Xinjiang on Walmart shelves.

The campaign is a retaliatory measure against President Joe Biden who signed the Uyghur law on the prevention of forced labor. The law prohibits the importation of products from Xinjiang unless the buyer can prove that they were not produced by forced labor.

Party-sponsored boycotts have also targeted the Houston Rockets, clothing retailer H&M, chipmaker Intel and other Western companies who have spoken out against the government’s horrific human rights oppression.

Foreign companies can expect the pressure to build ahead of the Beijing Winter Olympics next month. Human rights activists will pressure companies that profit from cooperation with the Chinese Communist Party just as Xi demands greater loyalty.

The experience of French retailer Carrefour is an uplifting tale that reveals what businesses can expect to happen. The company is one of Walmart’s main competitors in China, but it is no longer French.

Carrefour entered China in 1995 in the hope of tapping into the world’s largest consumer market. The company was the largest overseas retailer thanks to a legally required joint venture with Beijing Chuangyi Store.

Fast forward to 2019, and Carrefour was battling fierce competition from its local government-backed rivals. This shouldn’t have come as a surprise since Xi has repeatedly promised to support the “local champions” in their competition against foreign companies.

Carrefour soon sold 80 percent of its Chinese business to a local company. Amazon, Home Depot, Marks & Spencer, Uber, Google, Yahoo, LinkedIn and other giant Western companies have also pulled out of China’s openly hostile market.

Walmart remains silent, but even so, there is no guarantee that complying with the demands of the authoritarian regime will lead to long-term profits. Xi’s chauvinism is central to his vision of making China the world’s only superpower.

The oppression of the Communist Party, which is also part of Xi’s plan, will only get worse.

Chinese police shut down the last independent news outlet in Hong Kong on Christmas Day, arresting seven Stand News staff and board members, including a Canadian citizen. Authorities declared the stand seditious.

Fame offers no protection, as tennis champion Peng Shuai discovered. Authorities detained her incognito for three weeks after she accused a senior Communist Party official of sexually assaulting her. When she finally surfaced, she denied ever making the accusation.

China’s oppression of free speech does not stop at the nation’s borders. When the Wall Street Journal and the Sunday Times in London ran editorials calling the Hong Kong election a sham, officials told newspapers they could face prosecution under Chinese law.

Hong Kong Economic and Trade Office told the Sunday Times he had committed a criminal offense “whether incitement is made in Hong Kong or abroad”. Last year, the government expelled three Journalists from the Journal.

Western governments must protect their citizens from the excesses and intimidation of the Communist Party. The more the West ignores such intimidation, the more aggressive Xi will act.

European Union Economic and Trade Commissioner Valdis Dombrovskis said the bloc would use import bans, denial of research funding and suspension of subsidies as “anti-coercion instruments” if the Communist harassment persists.

California Democratic Representative Ami Bera, chair of the House Foreign Affairs subcommittee for Asia and the Pacific, and Rep. Ann Wagner, a Republican from Missouri, proposed creating an interagency task force that could respond at the coercion of China.

Former President Bill Clinton invited China to join the World Trade Organization, believing that capitalism would overcome communist authoritarianism. Instead, Xi armed economic globalization to establish his dominance rather than relying on the tanks and battleships used by the totalitarians of the past.

The world should understand that inaction in the face of Xi’s aggression would be capitulation.

Tomlinson writes commentaries on business, economics and politics.

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