The tensions within globalisation grow ever more strained

The latest wave of controversies surrounding US companies attempting to accommodate Chinese political and cultural sensibilities reveals how precarious the globalised economy is.

Yesterday we reported on the contortions Apple has subjected itself to as it tries to balance western free market principles with the apparent needs of the Chinese state. This perceived kowtowing generated considerable backlash, such that Apple CEO Tim Cook felt compelled to explain the corporate position to his employees in an internal email. The email leaked and even commentators normally favourably disposed towards Apple are unconvinced by Cook’s reasons for banning a Hong Kong mapping app.

This is just the latest example of US internet giants being put in a difficult position because their globalised nature means they have to find a way to do business in countries with a wide variety of politics and cultures. They all claim to be politically agnostic, but when their decisions are suspected of being influenced by political considerations, that claim is fundamentally undermined.

Google got in trouble with its own employees when they learned it was developing a version of its search engine that would allow the Chinese state to censor results, while both Facebook and Twitter were recently criticised for taking town accounts linked to the Hong Kong protests. China accounts for such a disproportionate amount of this intrigue because it is not only a notorious state censor, but is also the main focus of US geopolitical anxiety.

While global power dynamics probably form the principle objection to doing business with China from the ‘conservative’ side of the fence, cultural considerations seem to most concern the ‘liberals’. High profile human rights crises such as the Hong Kong protests and the persecution of China’s Uighur population have introduced a moral dimension to doing business with China that Silicon Valley companies are finding very difficult to reconcile.

The Uighur situation was even used by President Trump to justify the addition of several more companies to the US entity list of companies it wants to freeze out of the global marketplace recently. It’s widely assumed these kinds of sanctions, which include the actions being taken against Huawei, are more about the US trying to constrain China in general. But being able to claim a moral justification for pragmatic actions is an undeniably useful tool in the court of public opinion.

The flip side is that when a US company is suspected of seeking to accommodate Chinese political and cultural sensitivities, that takes on a moral dimension too and the company is seen as complicit in human rights abuses. Hence the likes of Blizzard and the NBA are currently under pressure to explain why they have acted to censor statements of solidarity with the Hong Kong protesters.

The globalised economy, coupled with the elimination of borders and distance provided by the internet, means these kinds of business dilemmas are bound to increase. These days many people expect companies to be moral as well as commercial entities and are prepared to vote with their wallets whenever they think they have fallen short.

In many ways this is an unfair burden to place on companies. Doing business should, in principle, be an amoral act born solely of supply, demand and mutual benefit. But they have brought this on themselves by introducing a growing moral element to their corporate branding as they seek to placate ‘woke’ consumers, and even have the temerity to suggest that buying their products is a moral choice in itself.

Entrenched moral positions often founder when faced with difficult questions for which there are no obvious ‘right’ answers. On one hand US companies have a fiduciary obligation to their shareholders to do business wherever there’s business to be done. On the other they increasingly have an obligation to their customers, employees and home countries to do the ‘right’ thing. As the geopolitical battle of wills between the US and China escalates it’s growing increasingly difficult to do both, and Western companies have some tough choices ahead of them.