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From Shake Shack to Starbucks, the Hong Kong-China standoff is proving bad for business

The Washington Post logo The Washington Post 2019-10-08 Shibani Mahtani, Timothy McLaughlin

a group of people standing in front of a store: People take photographs of a Starbucks shop damaged by pro-democracy protesters during clashes with police in Hong Kong last week.

People take photographs of a Starbucks shop damaged by pro-democracy protesters during clashes with police in Hong Kong last week.
© Chris McGrath/Getty Images

HONG KONG — One after another, the Starbucks outlets in the Wan Chai district just east of central Hong Kong were smashed up.

One, set on fire and vandalized just days before and boarded up, was splattered with fresh expletive-laden graffiti Sunday. The glass door on another was broken, the sharp tiny shards littering the sidewalk. The green logo of the twin-tailed mermaid on another store was defaced by black spray paint.

Hong Kong’s pro-democracy protesters have turned their anger toward businesses perceived as supportive of Beijing, with even American brands such as the Seattle-based global coffee chain and upscale burger joint Shake Shack becoming targets. It’s not the corporations that are in the crosshairs, but rather the local franchisee, Maxim’s Group, which is detested for its close ties to mainland China.

The pressure, however, is arguably even more intense from the other side. Beijing has been hypervigilant about any local or international corporation that has expressed even a shred of sympathy for the protest movement.

Among the hardest hit has been Hong Kong’s Cathay Pacific Airways, where about three dozen employees have been fired for making comments perceived as supporting the pro-democracy demonstrators.

But jitters have spread beyond the city’s borders, with shoe brand Vans, Spanish fashion house Zara and even the National Basketball Association getting caught between Hong Kong and Beijing.

The mounting pressure from protesters and authorities in Beijing is exposing a harsh truth for Hong Kong. Its days as a Western-friendly global financial hub, perfectly positioned to access the lucrative Chinese market, appear numbered. Hong Kong’s strong suit has become its weakness as companies get trapped on either side of a spiraling confrontation. 

“Hong Kong as Asia’s World City is finished. There is no way that Hong Kong can recapture its reputation as an efficient, safe, well governed, orderly place to live and work and do business anymore,” said Mike Chinoy, a Hong Kong-based nonresident senior fellow at the University of Southern California’s U.S.-China Institute. “Some of this stuff you can’t put back together.”

Hong Kong leader Carrie Lam acknowledged in a news conference Tuesday that Hong Kong’s economy is being battered, saying that last quarter’s economic data is likely to be “very bad.” Goldman Sachs in a research note last week estimated that up to $4 billion in capital left Hong Kong for Singapore over the summer.

In an American Chamber of Commerce survey in August, half of respondents said they thought Hong Kong’s reputation as a regional base had been tarnished, along with its status as a “model of effective and business-friendly governance.”

More than 80 percent of companies polled said the ongoing unrest was affecting plans for future investments.

The survey was conducted even before the campaign against brands with perceived pro-China connections. Police said Tuesday that more than 200 cases of vandalism had occurred over the past four days, crimes that go “beyond the freedom of speech argument” and will be punished in accordance with the law.

Aside from the MTR Corp., the subway operator considered now to be siding with authorities to suppress the protests, demonstrators have taken aim at the franchises operated by Maxim’s Group, Chinese banks and chambers of commerce, and businesses run by the Fujian community, a group from a southeastern Chinese province that has suspected links to pro-Beijing organized crime.

Some have even created guides and fliers, disseminated online and plastered all over Hong Kong, instructing their fellow protesters about what to target — hoping to instill some discipline and counter the government narrative that they are indiscriminate rioters.

Using cute graphics featuring a cartoon pig, the leaflets describe why one business should be smashed up and another supported. They have apologized to those inadvertently targeted, such as an HSBC bank branch graffitied along with a Bank of China branch, and helped them clean up the mess.

American brands such as Starbucks, which declined to comment for this article, are now being pushed to rethink their association with these Hong Kong businesses, or risk their stores being routinely damaged and boycotted.

“We won’t trust a business anymore once they have betrayed us,” said Sam, 32, a front-line protester who on Sunday threw a petrol bomb into a Xiaomi store, a prominent Chinese electronics brand. “We Hong Kongers are beginning to know how to make a choice, to support the pro-democracy stores rather than pro-Beijing megacorporations.”

Yet for others, it is the pressure from Beijing and the full force of the Chinese government that is harder to ignore than that of the protesters.

China’s pressure has extended to global banks such as HSBC, Standard Chartered and BNP Paribas. The international French bank distanced itself from bank lawyer Jason Ng after he posted a pro-democracy post criticizing pro-China supporters on Facebook late last month. He has since resigned.

“It has become clear to me that I can no longer juggle my day job and my activism work,” Ng wrote on Facebook. “If I must pick one, I will always choose the latter and I did.”

Felix Chung, a pro-Beijing lawmaker, said concerns about Beijing’s influence on international companies working in Hong Kong, and doing business in the mainland, were overblown.

“If people worry about China, how come there are so many international companies and multinational companies that step into the Chinese market?” he asked. “If they think China is a very dictating country, why do they still do business with China?”

The “big market,” he added, presents an opportunity for “big money.”

It comes at a great cost as Hong Kong airline Cathay Pacific found out as one of the earliest and most significant examples of how far Beijing’s authority could reach into Hong Kong.

After singling out the airline and its 20,000 Hong Kong-based staff members, China’s aviation regulator forced an overhaul of policy at the company and barred those who had participated in protests from flying into or over the mainland. The chief executive, one of his deputies and the chairman have been replaced.

Related slideshow: Hong Kong protests (Provided by Photo Services)

Once told that they would never be penalized for their political leanings, union representatives, as well as current and former Cathay employees, say a purge has begun, resulting in the firing of more than 30 employees thought to have even mild protest sympathies.

The Washington Post spoke to more than half a dozen former employees of Cathay Pacific and its regional arm, Cathay Dragon, who told nearly identical stories of abrupt firings after they were confronted by superiors with printouts of their private social media accounts and conversations in encrypted message groups.

One 36-year-old flight attendant, who had worked there for 12 years, was fired for discussing over WhatsApp the possibility of providing food vouchers to protesters — something she never followed through on.

All of the terminated Cathay employees who spoke to The Post said they were now seeking jobs outside of the airline industry, noting that three of the four airlines based in Hong Kong are owned by Cathay, and that the fourth, Hong Kong Airlines, is owned by a Chinese company.

“No [airline] company would take a chance on me if they heard about what happened,” said Yeung, 34, a senior flight attendant terminated last month after 13 years of service.

In an emailed response to questions, a spokesperson for Cathay Pacific said the company “fully supports the upholding of the Basic Law,” referring to the framework that gives Hong Kong significant autonomy from China, but also has to comply with regulations in all jurisdictions they fly to.

For many, however, it is the increasing acquiescence to the regulations in mainland China that are forever changing Hong Kong and taking away what once made it so attractive for business.

“People still don’t understand how terrible this place could be, if the whole place is turned into China under the Cultural Revolution,” Yeung said. “I don’t recognize this place anymore.”

shibani.mahtani@washpost.com

Tiffany Liang contributed to this report.

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