Hedge fund manager Kyle Bass, a frequent critic of the Chinese Communist Party, on Thursday blasted American companies that speak up against social injustices in the U.S., but fail to take forceful positions around human rights abuses in China.
“If U.S. national security was left up to corporate America, we’ll all be speaking Chinese very quickly,” the founder of Texas-based Hayman Capital Management said on CNBC’s “Squawk Box.”
In particular, Bass ripped Nike CEO John Donahoe for comments made last week during the company’s earnings call with Wall Street analysts.
According to a FactSet transcript, Donahoe said: “We’ve been in China for over 40 years. Phil [Knight] invested significant time and energy in China in the early days, and today we’re the largest sport brand there, and we’re a brand of China and for China.” Knight co-founded Nike under the name Blue Ribbon Sports in 1963. “We have a strong consumer franchise in China and they feel very connected to our brand. And so, we’re going to continue to invest,” Donahoe added.
Bass described the remarks as “actually pretty unbelievable.” He added, “Look, his job is, I guess, to maximize profitability. They are social justice warriors where they see fit until it affects their wallet.”
Nike faced backlash earlier this year after it said in a statement it was “concerned” about allegations of forced labor in Xinjiang, a western region home to Uyghur Muslims and other ethnic minorities.
In January, 24 hours before Joe Biden was sworn in as president, then-Secretary of State Mike Pompeo labeled the Chinese government’s treatment of Uyghurs in Xinjiang “genocide.” The administration of former President Donald Trump also took a hard line with China on trade — leveling tariffs on Chinese imports that led to reciprocal levies on U.S. imports there, before a “phase one” trade deal was reached in early 2020.
In March of this year, the Biden administration also sanctioned two Chinese government officials for their purported role in “arbitrary detention and severe physical abuse, among other serious human rights abuses targeting Uyghurs.”
In addition to China’s critical role in supply chains, the country has become an important consumer market for many American companies. China, which has a population of 1.4 billion people, now boasts the world’s second-largest economy.
Despite its economic flourishes since opening up to Western investment in the post-Mao era, China is not a democracy, and Beijing’s sweeping control over the economy puts businesses, especially American-based firms, in a delicate position in trying to avoid the ire of the Chinese government.
Bass said trying to walk that fine line between remaining in the economic good graces of President Xi Jinping while becoming increasingly vocal on societal issues in the U.S. is hard to square.
“Whether it’s LeBron James or Nike or Disney, they will be social justice warriors here in the United States because it’s fashionable to do so,” said Bass, who gained fame for his successful bet against subprime mortgages during the 2008 financial crisis.
“When it comes to a regime that the U.S. State Department has labeled as genocidal and committing crimes against humanity, their lips are sealed,” he added. “They actually become of China, for China.”
Nike, representatives for James, and Disney did not immediately respond to CNBC’s request for comments.
James, an NBA superstar who has had a longtime endorsement deal with Nike, faced criticism in 2019 for his response to the controversy involving then-Houston Rockets general manager Daryl Morey. Morey’s tweet in support of Hong Kong pro-democracy protestors was met with fierce blowback from the Chinese government.
The Los Angeles Laker had said he did not feel educated enough about the tensions between Hong Kong and mainland China to properly comment. Many felt that was an inadequate position to take, given James’ history of speaking out against police violence and racism in the U.S. More recently, James has been an advocate for voting rights.
Last year, Disney took heat for thanking government entities in the Xinjiang region in the final credits for its remake of “Mulan.”
Disney Chief Financial Officer Christine McCarthy defended the move as customary, saying it’s standard practice in the movie industry to acknowledge the “national and local governments that allow you to film there.” The credits “recognized both China as well as locations in New Zealand. And I would just leave it at that, but that’s generated a lot of issues for us,” she said in September at a Bank of America conference.
Bass said leaders in Washington need to exhibit “leadership” around Beijing’s human rights violations because U.S. companies will not stop pursuing “the pot of gold” that is access to China’s economy.
“It requires the State Department, the Commerce Department, the national security complex, National Security Council, to get together and actually make some difficult decisions. Don’t just lead with rhetoric and do nothing on the other side, because corporate America will not stop chasing the profits,” he added.
Source: Business - cnbc.com
