Jun 8, 2018

Businesses kowtowing to Beijing is nothing new

Qantas' recent concession to the Chinese government reminds us that if you want to do business with Beijing, you put up or you piss off.

Michael Sainsbury — Freelance correspondent in Asia and <em>Little Red Blog</em> Editor

Michael Sainsbury

Freelance correspondent in Asia and Little Red Blog Editor

Alan Joyce Qantas

Qantas chief executive Alan Joyce clearly searched high and low for options before making the inevitable kowtow to Emperor Xi Jinping in Beijing this week, agreeing to change company maps to include Taiwan — an independent, self governing, vibrant democracy — as part of the People’s Republic of China.

It was inevitable because if you are, like Qantas, a foreign corporation that wants to do business in China, what Beijing wants Beijing gets. You put up or you piss off.

This was the result of demands that Beijing made to 30 foreign airlines as Xi ramps up rhetoric about getting Taiwan “back” even though, historically, the island has never been part of the People’s Republic of China. Older readers and students of history will recall similar fraudulent territorial claims by Germany in the 1930s.

Beijing would doubtless have threatened Qantas’ few flights each day to China (one to Shanghai and one to Beijing, as well as three each day to Hong Kong). More pertinently, Beijing could have threatened Qantas’ much more valuable codeshare arrangement with China Southern and China Eastern Airlines, the country’s two biggest airlines — they feed passengers from Australia’s most lucrative tourist market on dozens of flights each day into Qantas’ market-leading domestic network.

Qantas is hardly the first blue chip Australian company to grovel before Beijing (publicly and privately) and its effort is a mere bagatelle compared to the prostrations made by miner Rio Tinto after four of its sales people (including Australian Stern Hu) were locked up in Shanghai for bribery and industrial espionage in 2010. Led by its then iron ore chief Sam Walsh — who had left Hu and the rest hanging out to dry and would later be promoted to be the company’s shortest serving chief executive in living memory — Rio inked two major joint ventures with Chinalco (its 9% shareholder, which is 100% owned by Beijing).

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Rio was gulled. One joint venture, an exploration inside China, went nowhere; the other, to mine iron ore on tenements in Simandou, Guinea, later collapsed in a steaming heap of losses (all costs born by Rio). Proving that you just can’t get too much of a bad thing, they have not stopped trying. Just last night, Rio announced a new venture with another state-owned Chinese mining giant, Minmetals. Good luck with that.

As well as these outstanding corporate kowtows, there has been a procession of Australian executives talking up the magnificence of the regime in Beijing. Mike Smith, late of ANZ, was a huge promotor. His successor, Shayne Elliott, basically canned ANZ’s China strategy, indeed its entire Asian expansion. There has been a conga line of business lobbyists turned China apologists, led, most prominently, by former foreign minister Alexander Downer. With co-lobbyists, ex-Victorian premier John Brumby and admiral John Lord, Downer shilled for telecomms group Huawei Technologies, even while ASIO made sure it was blocked from any contracts with the National Broadband Networks for fears of cyber spying.

Foreign Minister Julie Bishop continued the government’s strategy of many words and little action on the Qantas kowtow: “Private companies should be free to conduct their usual business operations free from political pressure of governments,” she said.

At the International Air Transport Association annual general meeting in Sydney, Joyce noted that Qantas’ behavior is pretty much in line with Australian foreign policy. “Airlines don’t decide what a country is called, governments do,” he said. “So we’re not doing anything different than the Australian government is doing in that case, and I think that’s the case for a lot of airlines.”

In a recent senate estimates hearing, Frances Adamson, Secretary of the Department of Foreign Affairs and Trade and a former Beijing envoy said, “I just want to be clear that while we may express views in a variety of ways — sometimes very publicly, sometimes behind the scenes — the government cannot be in a position to tolerate the exercise of economic coercion.”

If that is right then, Madam Secretary, why have we not heard a peep about the dormant, long promised Free Trade Agreement with Taiwan?


Leave a comment

9 thoughts on “Businesses kowtowing to Beijing is nothing new

  1. Wayne Robinson

    Well, Taiwan (or rather Formosa) was part of China until 1895. It’s not the same situation as the Czech Sudentenland which was originally part of Austro-Hungary and not part of the German Empire.

  2. James O'Neill

    Mr Sainsbury once again demonstrates his profound ignorance of history. He completely ignores the fact that until 1972 the government of Taiwan was the representative of the whole of china in the UN and sat on the Security Council. That was a fiction the Americans perpetrated with willing Australian compliance (cf the UK position for example).
    In 1972 that changed and a communique was signed between the Australian government and the PRC which read in part:
    “The Australian Government recognizes the Government of the People’s Republic of China as the sole legal Government of China, acknowledges the position of the Chinese Government that Taiwan is a province of the People’s Republic of China, and has decided to remove its official representation from Taiwan before January 25, 1973.”
    The government of the PRC are therefore entitled to object to any weakening of that position, just as the Australian government would be aggrieved if some defeated rebel group set up shop in Tasmania and declared itself the government of Australia, with the US fleet patrolling Bass Strait (as they did the Formosa Strait) to keep the legitimate government at bay.

    1. Rais

      It’s a bit of a mystery to me why Crikey uses Sainsbury. There are better informed writers out there. One of the reasons why I tossed up for a while whether to renew my subscriprion and nearly didn’t.

  3. Rais

    The anti-Beijing brigade carefully specify that Taiwan has never been part of the People’s Republic of China. It was long part of China before being occupied by Japan. The People’s Republic is just the latest of the long list of Chinese policies. But enough of that. If we’re going to criticise Qantas for following the policy of its own government and the governments of all major countries about Taiwan, why not ask what Foxconn and other Taiwan-based companies with big investments in mainland China have to say about Taiwan’s status?

    1. Rais

      Polities not policies.

  4. Jim Egan

    Joyce has a specially deep fried kowtow…it starts by bending over forwards, about facing and nuzzling up backwards in the hope of something heavenly from the middle kingdom.

  5. gjb

    Chinese are always Chinese, even when they are citizens of another country.
    It is ridiculous to believe Han Chinese with Australian citizenship would go against Beijing, they are only interested in prosperity and racial supremacy at any cost. just ask the Hmong, Nepalese… etcetc

    1. Rais

      What has happened to Crikey to let a racist slur like that get through?

  6. AR

    I wonder how long before we begin to see, on the pollies & merchants eager to do biz in the Middle Kingdom, the tell-tale bruised spot of the forehead from all the kow-tows?

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