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Companies to China: Don’t profit-block us bro

An article in this morning’s wall street journal commends a coalition of business associations and councils that sent a letter to China’s Premier publicly criticizing the latest attempt to censor information Chinese citizens can access on the internet. The green dam-youth escort mandate would require all computers going into the nation to be equipped with an information blocking software.

It is rare public criticism of China’s policy, but it's not brave, it will do nothing to change the policy, and reveals the danger of doing business in a country that has no respect for individual or economic freedom. In order for a business to be successful it needs to be able to meet market demands and offer products and be free from random government intervention. To that end, a business that hinges its survival on the Chinese market has only itself to blame if it fails.

Signatories on the letter complained that, due to the size of the Chinese market, and their reliance on revenue from sales in that country, they have “no choice but to accommodate the rule.” I call B.S. on that. If they really want to protect their ability to make long-term profits, they should stand on principle and demand the Chinese government respect their right to be the sole decision maker on how they operate and serve their consumers. They should demand that in every country and every instance it becomes an issue.

If they had held fast to that principle from the beginning, businesses would have never entered the Chinese market. Alas, the size of that market was too tempting for the short-sighted, and in pinning their success to China they bound themselves to an irrational and inconsistent regime and enslaved their business to the whim of a dictator.

Signatories in the letter to the Premier complain that the green dam-youth mandate will hurt their ability to profit in China. In reality, they are done for whether the mandate goes into effect or not. If it does, a black market offering customers what they want will spring up and severely undercut the profit of those companies that choose to comply with the mandate. If it is shelved, businesses might continue to make a profit in China, but not for long. It’s only a matter of time before the unpredictable government comes up with another plan that interferes with their ability to compete in the market.

The difference is, if they choose ‘money-today’ over protecting the rights of their customers in China and decrying any and all government interference in the market they are simply perpetuating the situation and guaranteeing that the Chinese market remains unpredictable and meddlesome.

So, what can companies do if they already made the mistake of getting mixed up with China? Instead of groveling before the Premier, begging for the ability to continue profiting from their poorly thought out business model, they ought to begin pulling out of the market. They should find other markets or reduce their operation to a size that is supported by markets that more reliably protect the rights of citizens and businesses to exchange goods freely.

As Gena Gorlin noted in her article, a business that stands on principle will be more profitable in the long term than a business that compromises in order to obtain short-term revenue. That principle is the right of a business to offer what it thinks customers want at prices it thinks they’ll pay. Without that ability how else can it compete? Do they expect the government to force Chinese citizens to buy their products? Companies that compromise on that principle have already given up on being successful businesses in the long-run.

I say kudos to the coalition for vocally opposing the mandate, but shame to any business that continues to deal with China on any other term than absolute freedom.