China’s message to NBA and other companies: love of country comes first

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China’s hostile reaction to an NBA executive’s tweet in support of anti-government protesters in Hong Kong has opened a window into the potency of nationalistic sentiment in the country, where consumers and sports fans have demonstrated a willingness to turn on brands for love of country.

It’s a reflection of shifts among the Chinese population, with far-reaching consequences for the stability of foreign businesses in the world’s second-largest economy, where the government demands that companies censor their public statements if they intend to operate inside its borders.

The NBA is so popular in China that it has sold broadcast rights for 10-figure sums. Last season, online partner Tencent counted more than 500 million viewers for streamed games. Shanghai-born Yao Ming, a former Houston Rockets star, is a national hero.

The size and dedication of the NBA’s following in China, however, has been little match for the patriotic fervour in a country whose leadership has stoked nationalism amid a slowing economy and fraying relations with countries such as the United States.

On Wednesday, the state-run China Daily published an editorial that lashed out at NBA commissioner Adam Silver for upholding the league’s commitment to free speech, just days after Houston Rockets general manager Daryl Morey tweeted – then deleted – an image supporting pro-democracy protesters in Hong Kong.

By “brazenly endorsing Morey’s secessionist-supporting tweet,” Mr. Silver has unleashed “Chinese people's anger at such displays of thoughtless prejudice,” the newspaper wrote.

China’s state-run CCTV has suspended broadcasts of preseason games in China this week, saying “any speech that challenges national sovereignty and social stability is not within the scope of freedom of speech.” Tencent also said it will not provide Chinese viewers access to Rockets content.

Even five years ago, such a ban on popular programming would have proven dangerous for China’s leadership, given its potential to backfire.

After authorities cut mainland access to Instagram in 2014 in the midst of protests in Hong Kong, researchers estimated that more than eight million people in China turned to censorship-evasion software such as virtual private networks, or VPNs, to continue using the photo-sharing social-media network. Some of those users then began digging into other content that would otherwise be blocked, including political criticism of China.

“By motivating more people to acquire the ability to evade censorship, a sudden increase in censorship can erode its own effectiveness, can politicize previously apolitical citizens and can accumulate collective action potential that it often seeks to suppress,” concluded the researchers, scholars at Northeastern University and the University of California, San Diego.

With the NBA, too, it’s likely people will find other ways to watch, one Chinese basketball expert said in an interview. The Globe and Mail is not revealing their identity because of the political sensitivity of the matter.

But, the expert said, Mr. Morey’s Hong Kong tweet landed at a particularly sensitive time, after the Oct. 1 celebrations of the 70th anniversary of the People’s Republic of China. Patriotism is front-of-mind right now, they said. As a result, some basketball fans are now willing to stop watching.

Indeed, statistics maintained by App Annie show no change in Chinese VPN downloads this week.

For China’s Communist Party leadership, the risk “is that millions of NBA fans are enraged they can’t easily watch their favourite game,” said Jeremy Goldkorn, a former director of media and internet consultancy Danwei who is now editor-in-chief of SupChina.com.

But, he added, “the mood of nationalism seems to be so strong in China right now, perhaps they have nothing to fear.”

The NBA’s troubles in China began with a consumer backlash rather than official opprobrium, said China Market Research Group founder Shaun Rein.

“This is genuine. People are angry,” he said. “The Chinese consumer has become exceptionally patriotic after the U.S.-China trade war. The NBA will not win.” Mr. Rein has in the past been criticized for a pro-Beijing stand. But what he sees today “scares the hell" out of him. "That’s why I’ve been thinking of moving to Canada or New Zealand.”

For foreign businesses contemplating expansion to China, his advice is stark: “You need to think two, three, four, five times about whether or not it makes sense.”

Several international brands have fallen afoul of China over perceptions they have sanctioned support of the Hong Kong protesters. Hong Kong flag carrier Cathay Pacific has fired pilots, flight attendants and its chief executive. Video-game giant Blizzard booted a high-profile gamer. And, on Wednesday, Apple incurred the wrath of the People’s Daily for allowing people in Hong Kong to download a mapping app used by protesters to identify the location of police. “Apple has to think about the consequences of its unwise and reckless decision,” the paper wrote.

The NBA, too, has discovered plenty of hurt feelings. The Globe interviewed the administrators of three NBA-related accounts on the Twitter-like Weibo service, who together count almost four million followers.

“My identity as Chinese is more important than my identity as a basketball fan,” said Alex Wang, who counts 1.4 million followers on Weibo, which posts basketball videos. Without an apology from the NBA, “I won’t post any more NBA-related videos,” she said.

The ill will extends beyond China’s borders. “For the moment I will not watch any NBA games. And I think many others are the same,” said J. Deng, the U.S.-based administrator of another Weibo account with almost two million followers.

The NBA has backed Mr. Morey’s right to speak his mind, with Mr. Silver saying this week: “As a league, we are not willing to compromise those values.”

Chinese celebrities and sponsors have responded by abandoning the league, while the country’s online shopping giants have been scrubbed of Rockets gear. On Wednesday, the Shanghai Sports Federation cancelled an NBA fan event.

“It will be hard to ease tensions,” said Chen Jing, a well-known social-media personality with half a million Weibo followers. “It seems likely that if the public opinion battle between China and the U.S. continues to grow sharper, the NBA will face another period of historical shutdown in China.”

The NBA’s struggles are confirmation of the stark new calculus that must be confronted by anyone doing business with China.

The Chinese Communist Party’s goal is conformity with its priorities – and it ”has the wherewithal these days to go pretty far in controlling that message,” said William Zarit, a Beijing-based senior counsellor with the Cohen Group, a strategic advisory firm. That means Beijing generally demands that those with operations inside its borders keep to themselves opinions it and the Chinese people might find offensive.

“So companies have to make that decision,” Mr. Zarit said. “If they want to be in China, they have to understand the rules of the game in China.”

With reporting by Alexandra Li

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