Riding the China elephant

Insight

Imagine you’re the spokesperson of an ASX listed company with a large local workforce and substantial international business interests.

A large chunk of your revenues come from China, your major customer market, and a country in which you’ve committed substantial investment, believing the Chinese economic miracle promises continued and long-lasting growth for shareholders.

Today, you’re fronting media interviews to talk through your end-of-year results. Aside from the numbers, there will likely be questions you do not want to answer:

  • How are you factoring risk considering your China outlook?
  • How do you see the situation in China affecting your business in the next 2-5 years?
  • With your Asia-Pacific headquarters in Hong Kong, what is your view on the protests taking place?
  • Do you consult the Australian government in relation to business risks emanating from China? What is the government telling you?
  • Australia-China relations are at their lowest ebb in generations. Do you see this as a threat to your and other Australian businesses?

Whichever way you frame it, the Chinese elephant in the room is putting many Australian businesses – not to mention NGOs, universities and our government – into a very uncomfortable position. The day is fast approaching when many businesses will have to decide their position on China.

How Australian businesses and our government answer questions about China from this social and moral perspective will have an impact on all of us. It may soon be time for our government and many of our leading companies to, not only recognise the public risk of the economic entanglement with China, but to weigh this up against our values.

This challenge is another example of how Australian society is increasingly expecting corporations to take a stance on important social issues, something many have done. Consider, BHP and its stance on climate change, Qantas on LGBTIQ+, the Business Roundtable on stakeholder versus shareholder, as examples. Organisations need to plan for the time when their stance on social issues carries reputational risk and, if necessary, change those positions accordingly.

They can do this by re-evaluating and clearly articulating their values. It might be that where market opportunity in a country like China is at stake, those values may put revenues and investments at risk in the short-term. If the investment is not consistent with those values, however, it will preserve what makes the organisation great and demonstrate to staff and customers the organisation stands for more than money.

SenateSHJ works with large local and international businesses, helping them navigate complex business challenges. A key part of our offering is helping clients define and articulate their organisational purpose. If you would like to know more, contact us here.