What Can We Learn From The NBA — China Conflict? An Understanding Of The Balance Of Power

On Friday October 4th the General Manager of the Houston Rockets, Daryl Morey, tweeted “Fight for Freedom. Stand with Hong Kong.” Seven words that threatened (and still threaten) to jeopardise a $4Billion business with China. In July this year, Versace had to apologise for its labeling of Hong Kong as a country. Before that, companies like Marriott and delta airlines have had to apologies for their contradiction of Chinese territorial claims.

Throughout history sovereign states have always maintained control over commercial entities operating in their ‘land’. This control, however, has increasingly been shifting from the hands of government to private companies. Over time as companies have expanded and become ‘trans-national’, their influence has spread enough to rival or at least challenge governments.

Colin Kaepernick, for example, took a stand against the police shootings of unarmed African Americans while under contract with the NFL. Although fired, he now is a Nike athlete. In a similar fashion, Dick’s sporting goods and Walmart have limited the sale of guns after an increase in shootings. Although these are not stands against an entire government per se, they have challenged and campaigned against the current administrations believes. Facebook founder, Mark Zuckerberg refused to attending parliamentary hearings in Canada and has faced no ‘consequences’.

The case with China, however, is clearly different. Chinese investment brings with it a huge amount of advantage. For the NBA, it brought an audience of over 600 Million viewers, a large middle class to buy its merchandise and vast amount of Chinese sponsorship. It also brought with it, the ability to take it all away regardless of the monetary loss it causes China. By controlling access into its economy, it can effectively dictate terms. Companies cannot leverage their ‘likeness’ or ‘popularity’ in order to negotiate market access on equal terms.

The dilemma becomes, if a business says no it China, there is nothing that stops China from developing a similar product for its people to use. However, the NBA isn't a service, its a product that is unique because it offers the best of basketball in the world. China can pour money into basketball internally, but it can not produce the same excitement or level of talent. This has provided some advantage to the NBA. It may also be the reason why, the only person in the NBA to officially apologise to China is James Harden. The General Manager of the Houston Rockets has simply stated that “I was merely voicing one thought, based on one interpretation, of one complicated event.” The NBA have also stood by its General Manager by stating that, “the NBA will not put itself in a position of regulating what players, employees and team owners say or will not say on these issues.”

As of now, Chinese business have cut their ties with the NBA and the media events in China have been cancelled as well. Politicians across the aisle, in the United States, have stated that the NBA has to take a stand against China. The playing out of this issue will show how foreign businesses can nagivate the Chinese market.

I write on politics, economics, data science and history; all views are my own.

I write on politics, economics, data science and history; all views are my own.