Breaking News

NBA learning a hard lesson about doing business in China


A key complication in selling your soul: What do you do when the the buyer stops paying?

NBA Commissioner Adam Silver appeared at the Time 100 Summit Thursday and made his first public comments about the NBA’s relationship with China since he returned to the U.S. earlier this week. He declared, “I don’t know where we go from here. The financial consequences have been and may continue to be fairly dramatic.”

The experience of the NBA should serve as a warning and lesson to the rest of the American business community. When the Chinese government grants you access to its market, it believes that it has purchased your obedience. It is not a “partnership,” as so many business leaders like to call it; the Chinese government believes that signing on the dotted line represents well-compensated servitude to their priorities. Houston Rockets general manager Daryl Morey’s tweet in support of Hong Kong’s anti-government protesters hardly represented a real threat to the power of the Chinese regime.

The heavy-handed effort to strong-arm the NBA was to demonstrate who was in charge and to send a clear message to every other international company operating in China: We have the power to force you to submit, and we are not afraid to use it. If we can make James Harden apologize, Charles Barkley choose his words carefully, Steve Kerr plead ignorance, and LeBron James declare our policies and actions just too complicated to understand, then we can certainly make you kneel in obedience.

Silver made his league sound more defiant that his critics think: “We were being asked to fire [Morey], by the Chinese government, by the parties we dealt with, government and business. We said there’s no chance that’s happening. There’s no chance we’ll even discipline him.”

Leaders of American companies eager to get access to the Chinese market should be asking themselves whether it’s worth it. Not just the moral cost, but whether Beijing is just too hypersensitive and vindictive an entity to sustain a long-term relationship. The Chinese government will never just let an American employee’s comment slide, and as they’ve made clear — with Marriott, Zara, Medtronic, and almost all airlines, as well as the NBA — they expect American companies to enforce their restrictions upon speech and criticism, on American citizens living on American soil.

Some American CEOs might look at the potential profits involved and still take the deal. But if one employee’s tweet is all it takes to blow up the deal, and suddenly cut off that king’s ransom of future profits, the Chinese market just isn’t worth it.

No comments