WA China Watch Digest Special!

WA China Gang of Four panel discussion: How should we see Amazon complying with China’s internet censorship?

By Wen Liu   Sept. 22, 2017

WA China Gang of FourIntroducing WA China Gang of Four:
An outgrowth of our little surveys over the last couple of years and a borrowing of the format of ChinaFile Conversation at the Asia Society, plus, of course, a play on words from a once-upon-a-time China, this is the debut of our online discussion panel, WA China Gang of Four. The four panelists, Sidney Rittenberg, Joe Borich, Dan Harris, and Carson Tavenner, all prominent China hands among Washingtonians, represent experience and expertise in China’s government and politics, U.S.-China diplomacy, WA-China relations, China's business laws, and U.S.-China sub-national communication. They would meet here from time to time to share their views on various China- and WA-China-related topics, to help, stimulate and challenge us in our understanding of the issues. So here, welcome our panelists, and welcome to the first WA China Gang of Four discussion.

amazon web services. Baidu screenshot.Today's Topic of Discussion:
In August, The Wall Street Journal had this headline story: "Joining Apple, Amazon’s China Cloud Service Bows to Censors." It talked about how following Apple in removing anti-censorship tools from its app store in China, Amazon’s China cloud-computing operator, Beijing Sinnet Technology, also told its local customers to stop using VPNs, virtual private networks, which helped Chinese users to vault the Great Firewall, the country’s extensive system of internet blocks, in compliance with the country’s new cybersecurity laws. Considering China’s increasingly huge internet market on the one hand and the Chinese government’s increasingly strict control of the internet on the other, and different experience in this area of Google, Facebook, LinkedIn, etc., here is the question: How should we see Amazon’s China cloud service complying with China’s internet censorship, a good business decision, law-abiding, or a compromise?

Sidney Rittenberg, Sr.Sidney Rittenberg, Sr. (Bio: Starting in 1944 as an American GI in China, Sidney’s dramatic China career included joining the Chinese Communist Party, working closely with first generation Chinese leaders, heading a rebels group during the Cultural Revolution, and sitting in jail for 16 years as a foreign spy. Continuing that career in the U.S. since 1980, in Washington state in particular, Sidney has been a consultant, scholar, and author, especially of his China biography "The Man Who Stayed Behind.")

When an Americans corporation goes to a foreign country to do business, it should be a model of good business--a contribution to a developing country that is just learning how to best do business. This naturally includes respect for, and compliance with, the foreign country's laws. You don't like their laws? Tough. They probably don't like yours. But if you want to do business there, you're not likely to get away with breaking the law, nor should you.
         Of course, a good American company is perfectly justified in negotiating with Chinese authorities, arguing for the need to express a wide variety of views and for the enhanced appeal that a more liberal policy brings to the country's--and the government's--public image. But if the decision goes against you, you are obliged to observe it or to get out.
         As the old Chinese saying goes, "When you climb a mountain, you sing that mountain's songs." It's all too easy to poke fun, and say "They're kowtowing to the Chinese," "They're 'Panda-huggers,'" etc., etc. But do you really want them to disrespect and violate the country 's laws?
         Google pulled out of China, allegedly, to protest censorship rules. Actually, they left because their business plan was not working. They monumentally failed to adjust to the demands of the Chinese market, and lost in competition with the Chinese Baidu and others. They've been trying to get back ever since.
         When I was growing up in South Carolina, we had no divorce law, but we had a law that said no man was allowed to beat his wife--with a stick any thicker than his thumb. Wicked as that law was, if Chinese companies had been doing business there then (they were not), we would expect the husbands to carefully measure their sticks.

Joe BorichJoe Borich (Bio: With a 25-year Foreign Service career, Joe served as a diplomat under every president from Richard Nixon to Bill Clinton, and on both sides of the Taiwan Strait, culminating in serving as the American Consul General in Shanghai from 1994-1997. He then served 16 years, longest ever, as the executive director/president of the Washington State China Relations Council. Joe continues to help American companies engage with China as a senior advisor at the Nyhus Communications.)

Let me start by rewriting the referenced headline: "Amazon joins Apple to support its business interests in China". Don't get me wrong - I think censorship is abhorrent and ultimately self-defeating; but, why should we place the burden on corporate America to try to pressure China on what we feel are China's moral lapses and mistakes, and in defiance of our own business interests? I think we assume that companies like Apple and Amazon have far more leverage in China than they do and that the Chinese government will buckle on censorship if only our best known companies would resist implementing China's censorship policies.
         Let's say, for example, that Alibaba has promised a multi-billion dollar investment in the US, but only if Washington abandons its plan to erect a wall along the Mexican border. How much traction would such a proposal have? Probably zero and falling, even though a large percentage of Americans believe such a wall is immoral and wrong-headed (perhaps approaching the same percentage of Chinese citizens who might feel censorship is immoral and wrong-headed).
         Protecting stake holder interests and making profit constitute the proper work of business, circumscribed by applicable laws and regulations. Tasking business with saving China from censorship is a fool's errand.

Dan HarrisDan Harris (Bio: Designated a Super Lawyer, Dan is almost synonymous with China Law Blog, one of the best law blogs on the web, also named to ABA Journal’s Blawg Hall of Fame. A leading authority on legal matters related to doing business in China, his perspective on international law issues have been sought by the Forbes Magazine, The Wall Street Journal, The Economist, etc. Dan writes and speaks extensively on Chinese law, especially on protecting foreign businesses in their China operations.)

As a lawyer who represents mostly American and European companies that do business in and with China, I tend not to view most business issues as moral issues and my answer is that it is a good business decision. Do I like how China censors the internet? Hell no. Do I like to see people and companies fight back against censorship in China and elsewhere? Most emphatically yes. But by the same token, companies — especially those that have an obligation to their own shareholders, are going to focus mostly on expanding their customer base and that is what Amazon is doing here. And let’s face reality; pretty much every company that does business in China is to a certain extent making a compromise with the ruling powers. Any company that does business with China or in China is, at least to a certain extent, aiding the existing regime there. Amazon is in the business of providing cloud services and that is what it is doing in China.

Carson TavennerCarson Tavenner (Bio: Carson’s China interest sparked early when he initiated a sister-school relationship between his school, Puyallup High School, and Nankai Middle School in Chongqing, Seattle's sister city. He taught East Asian history at the Air Force Academy where he had graduated. With his own Tai Initiative on China, Carson revived the once dormant Washington Sichuan Friendship Association, and has been promoting U.S.-China sub-national level communication and understanding.)

This topic and the central question drive straight to the timeless question of how to assess moral behavior. When I think of the question whether a business' actions are moral -- particularly those times when I think of them in the context of the business' relationship with the PRC -- I'm usually thinking about whether we can expect a business to have a similar kind of moral compass as we can expect from an individual person. Though I do not think the two moral expectations can be at all seen as the same, I do believe there are some basic structures we can turn to that provide clarity on both individual and corporate moral behaviors.
         First of all, moral behavior is not a binary choice; there is actually a very blended and confusing spectrum of activity along the moral axis. So instead of asking the question "is it or isn't it?" I think we should focus on what it means to develop morally, to move from a position of "less moral" to "more moral."
         There are three fundamental stages of moral development in individuals which I believe translate well to understanding business behavior.
         The first level of development is when you avoid doing the wrong thing in order to avoid punishment. An individual example is a child learning at an early age not to steal candy because there will be a spanking or other punishment; the child learns to be disciplined enough to avoid doing wrong so they don't get punished. In a business example, a company learns early on to pay its taxes to avoid costly government fines and court actions.
         The second level is harder for people to reach, but most adults aspire to this level and many reach it. This is where one intentionally performs good actions, not just avoiding the bad, in order to attain an identity of being part of a group, particularly a group that "does good". Both individuals and businesses engage in this kind of activity by joining or even organizing park clean-up campaigns, volunteering for local charity work, etc. International corporate volunteerism (or ICV) is "a thing" in the 21st century. Nevertheless, there is a cost to achieving this level of moral development in energy, time, and sometimes money. Therefore it demonstrates moral development beyond the first level.
         The third level is hard to reach indeed; it is when one is willing to perform good actions even when there will be punishment for doing good. There are virtually no social or cultural judgments placed on people who never reach this level because we cannot expect it of people. Yet tens, perhaps hundreds, of thousands of Chinese and Americans are personally acquainted with this level of moral development, having achieved it. Those people who do attain this level --- even if temporarily in a young person's case -- often receive admiration and praise from many, and bewildering looks from others who do not see the moral value of the person's actions in light of the punishment they received. A common individual example is when a friend pays a heavy price for remaining loyal to a friendship that many would have otherwise abandoned. Our own panel member Sidney Rittenberg is one who personally understands this sort of moral development. An extreme individual example is when a combatant lays down their very life to save the life of another, as in the classic -- and all-to-often-real -- case of covering an explosive device with one's body.
         Do we see businesses achieve this third level of moral development? I think it depends on how much moral imperative we put on the business' required expectations to make a profit. If losing profit potential is actually a punishment, I believe many environmentally damaging companies have modified their behavior at great cost to them even though the law did not require it, in order to demonstrate a moral behavior.
         When a company like Amazon decides to carry out procedures in the PRC which seem to propagate those PRC policies most odious to Americans, what level of moral development are they portraying? Is the moral imperative of a business to earn money, as a responsible act of loyalty for the faith and trust placed in the business by the shareholders/investors? History generally show us that businesses are allowed -- even expected -- to ignore the possible moral consequences to individuals of company actions; witness the tobacco, alcohol, and pornographic industries and the litany of both restrictive yet also protective laws surrounding them in America.
         Nevertheless, it is entirely possible for a company to attain the third level of moral development by giving up the potential for ludicrous amounts of profit -- thereby taking on punishment by the loss of such potential -- for the sake of performing an act of good that would demonstrate an institutional value for individual people's lives. I yearn for the day when we can clearly see such behavior among both America's and China's international corporations.

(See WA China Gang of Four panel discussion on U.S. China trade deficit here.)

(For more information on major events in Washington state-China relations, go to WA China Chronicle.)