Hong Conquered: The NBA's China Problem

Allow me to blow your mind. The world, it turns out, is an intricate place. Crazy, I know. We live in a world where you can go your entire life without ever meeting the people that grow your food, build your gadgets or own the place you call home. The distance that the global market puts between people and the products that they consume can make life easier at times. I’ve never met the cows that eventually become my cheeseburgers, for instance. But that distance is also dangerous. The fact that I don’t have to meet the condemned before they end up on my dinner plate isolates me from the fact that maybe, just maybe, eating beef six times a week isn’t something I should continue to do. This fuzzy acceptance of what we take in, and the true costs of doing so is ubiquitous to modern capitalism, and it’s hard to escape from. You can eat less meat and buy shoes made without child labor and still do 100 things every day that are hurting other people. So, I think it’s important that we recognize the particularly egregious times when the profit margins of a company are put ahead of the rights of human beings. That means we need to talk about the 200-ton Panda in the room. I’m not going to pretend to be an expert on the long winding history of how Asian colonialism led us to this moment where thousands of Hong Kong residents continue to flood the streets, but I’m going to give you the abridged version anyway.   Modern Hong Kong was born in the 1840s after the British Empire took over the territory and turned it into a military site. From there, Hong Kong gradually became an important

port of call for the region, and soon under the might of the British crown, became an important economic center for the empire and its business throughout Asia. After the Second Opium War ended in 1898 (Yes, that’s really the name), Britain signed a 99-year lease for Hong Kong, agreeing to give it back to China in 1997. No one could have predicted how China, Britain, and the city of Hong Kong would grow and evolve over that period of time. Britain slowly held less and less power over its empire as the 20th century progressed. China would suffer horrendously during the first half of the 20th century before embracing communism and then would continue to suffer horrendously. Eventually, a form of plutocracy grew from the communist state that would transform the nation into a global giant. In the ’80s, a treaty was agreed to between China and the U.K. that would allow Hong Kong to keeps its economic system and some governmental autonomy for another 50 years after being returned to China. And this is when it starts to get really complex. China is still obligated to honor the treaty, but has been sabotaging the autonomy of Hong Kong basically since the moment the Union Jack was lowered from the capitol. A variety of things— election meddling, economic pressure, extradition treaties, espionage—have all sent Hong Kong locals onto the streets to protest attacks on Hong Kong’s sovereignty through the years. China knows while military force likely would not be used by any of the G7 nations to enforce the agreement, China would risk major political losses if seen blatantly overstepping the terms of the “one country, two systems” agreement.  

In a brilliant move of self-defense, China weaponized their economy. Over the past 30 years, China has invited the largest companies to its shores and fostered economic connections to every corner of the globe. Entire industries now depend on Chinese goods or services. The “communist” nation has ironically insulated itself with global capitalism. At this point, China is too big to fail. If the Chinese economy were to take a major hit, so would every other market in the world.

That leads us back to today. Hong Kong is once again protesting on behalf of their sovereignty, reading the writing on the wall, as China works to strip away their protection from the inside. And no one is going to lift a finger to stop them.

Except apparently, the General Manager of the Houston Rockets. Daryl Morey was doing what all of us do. He was surfing his social media feed, saw something that stirred something inside him and he decided to post about it. Morey tweeted an image that simply read, “Fight For Freedom, Stand With Hong Kong”. It was a simple pro-democracy statement made by an American sports executive. You’d expect most Americans to at least agree with that statement. The people in mainland China couldn’t even see the tweet, thanks to their government’s “Great Firewall” which keeps free speech from the rest of the world away from Chinese eyes. But for the NBA and the Houston Rockets, their pocketbooks aren’t only affected by what Americans think anymore. It turned out that Morey’s tweet left the Chinese government and their business interests pretty pissed. About 10% of the NBA’s revenue comes from China. It is one of the NBA’s largest markets and in terms of the number of eyes it is their biggest market. The Houston Rockets are (or were) one of the most popular teams in China, thanks to their choice to draft the first Chinese superstar, Yao Ming and their extensive marketing in the country. Rockets owner Tilman Fertitta was quick to put distance between the Rockets and his General Manager’s pro-human rights tweet.

NBA Commissioner Adam Silver then tried to do the impossible. In an impotent statement, the NBA attempted to say they both respected the human rights record of the People’s Republic of China while making clear that they also like freedom and stuff. To the shock of almost no one, it landed with a thud and things have escalated quickly from there. Chinese television providers first said that they would stop showing Rockets games immediately. The NBA tried to correct its original statement, adding a bit of backbone by saying that they wouldn’t (or more or less can’t) censor their players or employees. In response, CCTV said they would not broadcast NBA basketball at all this season. All of the NBA’s partners then got in lockstep with the ruling party and announced that they were severing ties with the league. It’s not just the NBA either. American gaming giant Blizzard Entertainment, makers of video games like World of Warcraft and Overwatch, have also fallen into the tar pit that has become Sino-American economics. Pro Hearthstone player Ng Wai Chung, a Hong Kong resident, called for a political revolution in the city. Blizzard, fearing the backlash that hit the NBA, immediately disqualified him from a tournament and banned him indefinitely. This caused a storm of protest which has swept across the internet, with thousands of people boycotting any games made by the company or its parent company Activision until Chung is reinstated. That’s the thing when doing business in China. You aren’t going into business with a company, you’re going into business with the government. There is no free market in China. If you own a Chinese business or want to work with one, you do what the People’s Republic of China tells you to do. You can’t hurt China, but they sure as hell can hurt you. The NBA and Blizzard are staring at huge losses in revenue thanks to their fat-fingered response to a political crisis half a world away. Their desire for a better profit margin made them short-sighted to the same problem that has caused all this strife in Hong Kong. They forgot they’re dealing with two systems that are barely compatible in the first place.   What’s the solution? Well, there really isn’t one, not a good one anyway. Companies can either continue to kowtow to China by staying silent or (in the case of Apple) help China silence Hong Kong.

Or, companies can embrace the type of freedoms that helped create their wealth and be willing to take it on the chin when the Chinese government uses their billions of subjects as a tool for economic warfare.

So, in the meantime, it’s probably best to follow this simple plan first created to deal with another communist power: Trust, but verify. Trust your gut, and verify that those brands and franchises you give your loyalty to actually do the right thing. Because in a world where the NBA depends on China for the very ball they play with, it’s a lot more tempting to ignore the values millions of people depend on while they continue the hunt for the almighty dollar.