April 8, 2021

Asia

CHINA: Calls for Beijing Olympics boycott will put companies in a bind

BY Gabriel Wildau

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( 4 mins)
  • Washington will be reluctant to launch a boycott unless other rich democracies can be counted on to follow suit; this possibility still appears unlikely but cannot be ruled out.
  • Even if a boycott never materializes, foreign companies involved with the games face serious reputational risks, alongside the ethical risks facing companies operating in Xinjiang.
  • In many cases, the most prudent decision may be to seek middle-ground positions that anger both sides but avoid the impression of decisively aligning with either one.

China’s foreign ministry warned of an unspecified “forceful response” if the US initiates a boycott of the 2022 Winter Olympics in Beijing. The US State Department on 6 April walked back an earlier statement that appeared to suggest Washington is considering a boycott, but even the more cautious statement did not rule out the possibility. Following joint sanctions by the US, EU, UK, and Canada over alleged mass detentions and forced labor in Xinjiang, activist calls for a boycott are growing. China’s retaliatory sanctions on Western officials, researchers, and think tanks may have mobilized even greater anti-China sentiment, given the perception that China is attempting to silence critics.

Washington will be reluctant to launch a boycott unless other rich democracies can be counted on to follow suit, since a unilateral boycott would create the impression of US isolation. Currently, a concerted international boycott still appears unlikely, but even absent a boycott, Olympic sponsors and other foreign companies involved with the games will face tough questions from Western activists and media, as well as the risk of retaliation from the Chinese government and consumers.

The recent online firestorm that engulfed H&M and other foreign apparel brands offers a preview of these risks. On the other hand, as previously noted, Beijing’s approach to retaliation against foreign companies has been far more selective than fiery rhetoric and vague threats from the foreign ministry and state media would suggest. Beijing’s impulse to punish foreign companies for actions and statements deemed is tempered by a competing desire to resist decoupling by enmeshing foreign groups more deeply with Chinese supply chains and consumer markets.

Beijing has been more willing to engage in tit-for-tat retaliation against governments. But just as with its response to the recent Xinjiang sanctions, Beijing would struggle to formulate a response to a US boycott that achieves reciprocity without escalation. Since there is no US-hosted Olympics for China to boycott, Chinese retaliation might take the form of sanctions against US officials and sports industry executives. The management of the US Olympic & Paralympic Committee; national associations that govern specific sports; and US diplomats in charge of cultural exchange all offer possible targets.

For companies seeking to protect market access, government relations, and brand reputations in both China and the West, there are no easy answers. From a reputation management perspective, seeking to maintain political neutrality by arguing that the Olympics should not be politicized may be the least bad option. In many cases, the most prudent decision may be to seek middle-ground positions that anger both sides but avoid the impression of decisively aligning with either one.

Companies may plausibly argue that a boycott is unlikely to alter conditions in Xinjiang but would rob innocent athletes of their once-in-a-lifetime opportunity for Olympic glory – opportunities that corporate sponsorships make possible. Companies that manufacture in Xinjiang or source raw materials like cotton, tomatoes, and polysilicon from the region may argue that audits to ensure that their own supply chains do not involve forced labor is ethically sufficient, regardless of what may be happening elsewhere in the region.

But many critics will find these responses unsatisfactory. They will cite the long history of Olympic athletes using their platforms to make political statements, as well as the precedent of previous government-led boycotts. In terms of manufacturing and sourcing, they will argue that the mere presence of foreign companies in Xinjiang implicitly legitimizes Beijing’s policies and that no amount of due diligence can ensure that these companies’ operations are untainted. Ultimately, however, some companies may be unable to avoid actions and public statements that amount to taking sides.

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