Manufacture This

The blog of the Alliance for American Manufacturing

China demands U.S. companies hand over their IP -- & maintain their silence on human rights abuses.

Monday marked the 29th anniversary of the Tiananmen Square Massacre, when Chinese troops stormed into the heart of Beijing and killed hundreds – if not thousands – of pro-democracy demonstrators.

Outside of China, the tragedy is perhaps best remembered in a historic photograph of a lone, unknown man facing down a line of tanks. But within China, it is forbidden to discuss the events of June 4, 1989. Tiananmen survivors and family members of the victims face harassment by authorities, while others have been jailed for discussing Tiananmen publicly.

Why are we at the Alliance for American Manufacturing bringing this up?

Tiananmen is one of many topics that the Chinese regime demands remain off-limits – both by its own people and by foreign companies wishing to do business there. And many major American corporations are willing to play along.

The Wall Street Journal on Monday reported that some U.S. companies are now employing consultants to guide them through “China’s geopolitical sensibilities” after several have come under fire from Chinese authorities for bringing up topics the Chinese government doesn’t want discussed.

Here’s the WSJ:  

“American companies such as Delta Air Lines Inc., Marriott International Inc. and Gap Inc. and some European firms have apologized and changed or removed content that China has deemed offensive. … China’s actions also reflect a new reality in which companies seeking to tap the world’s second-largest economy must increasingly contend with officials monitoring the internet for perceived slights and political missteps.”

So what topics draw China’s ire? Tiananmen is off-limits, of course. Taiwan is a no-no. And don’t even think about bringing up Tibet.

China ordered Marriott to suspend its online services there when the hotel chain sent out a guest survey that included Taiwan, Tibet, Macau and Hong Kong as countries. Gap found itself in hot water after it sold a T-shirt “depicting a map of China that omitted Taiwan and other China-claimed territories,” the WSJ reports.

Meanwhile, German-owned Mercedes-Benz pulled an Instagram post in February that quoted the Dalai Lama.

We’ve spent a lot of time here on the blog talking about the various ways American companies give in to the Chinese government in order to do business there. Usually we focus on the economics.

For example, American companies are forced to enter “joint venture” agreements to operate in China, which sees them handing over their valuable intellectual property (IP) to the Chinese government. China in turn takes that IP and uses it to build its own version of the products – meaning American companies find themselves competing against the very same products they spent time and money developing.

But China also exerts itself by restricting companies’ speech and other internal business practices – and in doing so, effectively suppresses any discussion of its human rights practices.

The United States, of course, isn’t immune to criticism over its own human rights record. But that record is part of the ongoing public debate, and American companies are free to take on those issues if they choose. Many do.

Yet in order to access China’s market, many companies are also willing to stay silent on tragedies like Tiananmen Square and toe the communist party line on Taiwan and Tibet. That’s capitulation, pure and simple – and given China’s economic demands when it comes to things like IP, we’re not convinced it’s all that good for business, either.