China’s Demands for Loyalty Are Bad for Business
Beijing has successfully muscled foreign companies in Hong Kong, but at what cost?
Hogg’s departure from Cathay Pacific is an ominous sign.
Photographer: Anthony Kwan/BloombergThe standard advice for foreign investors in China used to be that they should stay out of politics and focus on business. Now that dictum has been flipped on its head, as companies face growing pressure to align with the Chinese government or lose access to the world’s biggest emerging market.
The recent resignations of Cathay Pacific Airways Ltd.’s highly regarded chief executive Rupert Hogg and Chief Customer and Commercial Officer Paul Loo are the latest evidence of the Chinese Communist Party’s influence over the corporate world. On the face of it, Cathay’s climbdown represents a win for Beijing. It furthers the central government’s political objectives in Hong Kong and sets an example for other companies to follow.