Intel and Tesla Struggle to Balance Ethics and Profit in China

News Analysis Many multinational companies in China are in a dilemma. They find it almost impossible to maintain moral and ethical norms while appeasing Beijing in order to make money in China. Intel and Tesla are two prominent examples. Despite kowtowing to Beijing, Intel and Tesla have been recently suppressed by the Chinese Communist Party (CCP). Intel Appeases the CCP, Supports Beijing Olympics Intel’s Chinese website had a page dedicated to promoting the Winter Olympics, stating that it wanted to “join Beijing to create a better future.” It also contributed new technologies—such as artificial intelligence (Al), 5G, and virtual reality (VR)—to help the Beijing Games achieve the effects of “applause and cheers” when there were few audience members at the opening ceremony. The website quoted Zhang Yimou, the director of the Olympics opening ceremony, as saying that the opening programs “convey to the world China’s confidence in defeating the pandemic.” However, the CCP’s draconian pandemic control measures encountered worldwide criticism. Intel’s Beijing 2022 Winter Olympics Experience Center, completed in September last year, used the latest technologies to deliver a far more immersive experience than in previous Games. Nonetheless, the company was forced to apologize to the CCP for its statement on the “Xinjiang issue” three months later. In order to conform to the U.S. policy against the CCP’s human rights abuses in Xinjiang, Intel had asked its suppliers in an open letter to ensure that its supply chain doesn’t use any labor, products, or services from the region. Rights groups and government officials have said that 1 million Uyghurs are detained in internment camps. After the letter was disclosed by Chinese state media on Dec. 22, 2021, Intel was immediately lambasted by Chinese netizens. Visitors are seen at the Intel booth during the China Digital Entertainment Expo and Conference, in Shanghai, China, on July 30, 2021. (Aly Song/Reuters) A few days later, Intel deleted the letter and issued a statement in Chinese on social media, saying that its previous statement on Xinjiang human rights issues was “only for the purpose of compliance and legality, with no other intentions or position,” and that Intel “respects the sensitivity of this issue in China.” In addition to Intel, H&M, Nike, Adidas, and Japanese clothing brand Uniqlo have also encountered public criticism in China for the same reason. Intel currently has more than 10,000 employees in China, and China has been Intel’s largest revenue market for six consecutive years, accounting for about a quarter of its total global revenue. Tesla’s Troubles in China Toward the end of last year, the Washington-based Council on American-Islamic Relations criticized Tesla, calling its newly opened showroom in Xinjiang “economic support of genocide.” Beijing has made it difficult for Tesla to operate in China. In the latest incident on Feb. 18, the company had to recall 26,000 Chinese-made vehicles in accordance with requirements from the State Administration for Market Regulation, as the defrosting system was said to be substandard. Previously, a Chinese internet celebrity, known as “Xiaogang Senior” with tens of millions of followers, accused Tesla of falsifying its testing data for electric vehicles. Tesla filed a lawsuit on Jan. 26, saying that it was an intentional defamation. According to the Chinese enterprise information website Tianyancha, Tesla had nine pending cases involving reputation and infringement disputes in China last year. Last February, the CCP’s five ministries and commissions summoned Tesla China’s top executives, claiming that its electric vehicles had serious safety problems. Tesla then issued an apology, saying it “sincerely accepts the criticism and guidance” from Chinese authorities.  On March 15, 2021, China’s Consumer Rights Day, several major Chinese media outlets reported on a Tesla vehicle accident that had occurred on March 11. This story became the most searched topic on Chinese social media for several consecutive days. A Tesla protest at the Shanghai auto show on April 19 ended with a woman being dragged off by security guards after she climbed onto a car. The protester, who wore a white T-shirt emblazoned with the Tesla logo and with the Chinese characters reading “brake failure,” shouted: “Tesla break malfunctioned!” for several minutes before being taken away, according to various media outlets. This incident triggered a new wave of criticism against Tesla by China’s major media. Some government departments even banned Tesla cars from their parking lots. People visit a Tesla booth during the media day for the Shanghai auto show in Shanghai, China April 16, 2019. (Aly Song/Reuters) Although Tesla China Vice President Tao Lin alleged that there was manipulation behind the female protester, and Tesla’s background data showed that the accident was caused by the driver’s speeding, Tesla issued a pu

Intel and Tesla Struggle to Balance Ethics and Profit in China

News Analysis

Many multinational companies in China are in a dilemma. They find it almost impossible to maintain moral and ethical norms while appeasing Beijing in order to make money in China. Intel and Tesla are two prominent examples.

Despite kowtowing to Beijing, Intel and Tesla have been recently suppressed by the Chinese Communist Party (CCP).

Intel Appeases the CCP, Supports Beijing Olympics

Intel’s Chinese website had a page dedicated to promoting the Winter Olympics, stating that it wanted to “join Beijing to create a better future.” It also contributed new technologies—such as artificial intelligence (Al), 5G, and virtual reality (VR)—to help the Beijing Games achieve the effects of “applause and cheers” when there were few audience members at the opening ceremony.

The website quoted Zhang Yimou, the director of the Olympics opening ceremony, as saying that the opening programs “convey to the world China’s confidence in defeating the pandemic.”

However, the CCP’s draconian pandemic control measures encountered worldwide criticism.

Intel’s Beijing 2022 Winter Olympics Experience Center, completed in September last year, used the latest technologies to deliver a far more immersive experience than in previous Games. Nonetheless, the company was forced to apologize to the CCP for its statement on the “Xinjiang issue” three months later.

In order to conform to the U.S. policy against the CCP’s human rights abuses in Xinjiang, Intel had asked its suppliers in an open letter to ensure that its supply chain doesn’t use any labor, products, or services from the region. Rights groups and government officials have said that 1 million Uyghurs are detained in internment camps.

After the letter was disclosed by Chinese state media on Dec. 22, 2021, Intel was immediately lambasted by Chinese netizens.

intel
Visitors are seen at the Intel booth during the China Digital Entertainment Expo and Conference, in Shanghai, China, on July 30, 2021. (Aly Song/Reuters)

A few days later, Intel deleted the letter and issued a statement in Chinese on social media, saying that its previous statement on Xinjiang human rights issues was “only for the purpose of compliance and legality, with no other intentions or position,” and that Intel “respects the sensitivity of this issue in China.”

In addition to Intel, H&M, Nike, Adidas, and Japanese clothing brand Uniqlo have also encountered public criticism in China for the same reason.

Intel currently has more than 10,000 employees in China, and China has been Intel’s largest revenue market for six consecutive years, accounting for about a quarter of its total global revenue.

Tesla’s Troubles in China

Toward the end of last year, the Washington-based Council on American-Islamic Relations criticized Tesla, calling its newly opened showroom in Xinjiang “economic support of genocide.”

Beijing has made it difficult for Tesla to operate in China.

In the latest incident on Feb. 18, the company had to recall 26,000 Chinese-made vehicles in accordance with requirements from the State Administration for Market Regulation, as the defrosting system was said to be substandard.

Previously, a Chinese internet celebrity, known as “Xiaogang Senior” with tens of millions of followers, accused Tesla of falsifying its testing data for electric vehicles. Tesla filed a lawsuit on Jan. 26, saying that it was an intentional defamation.

According to the Chinese enterprise information website Tianyancha, Tesla had nine pending cases involving reputation and infringement disputes in China last year.

Last February, the CCP’s five ministries and commissions summoned Tesla China’s top executives, claiming that its electric vehicles had serious safety problems. Tesla then issued an apology, saying it “sincerely accepts the criticism and guidance” from Chinese authorities. 

On March 15, 2021, China’s Consumer Rights Day, several major Chinese media outlets reported on a Tesla vehicle accident that had occurred on March 11. This story became the most searched topic on Chinese social media for several consecutive days.

A Tesla protest at the Shanghai auto show on April 19 ended with a woman being dragged off by security guards after she climbed onto a car. The protester, who wore a white T-shirt emblazoned with the Tesla logo and with the Chinese characters reading “brake failure,” shouted: “Tesla break malfunctioned!” for several minutes before being taken away, according to various media outlets. This incident triggered a new wave of criticism against Tesla by China’s major media. Some government departments even banned Tesla cars from their parking lots.

People visit a Tesla booth during the media day
People visit a Tesla booth during the media day for the Shanghai auto show in Shanghai, China April 16, 2019. (Aly Song/Reuters)

Although Tesla China Vice President Tao Lin alleged that there was manipulation behind the female protester, and Tesla’s background data showed that the accident was caused by the driver’s speeding, Tesla issued a public apology. However, Chinese state media Xinhua News Agency said the apology was “insincere.”

In an article, titled “Tesla’s Struggle In China Is A Warning To All Western Companies,” author and American entrepreneur Helen Raleigh wrote: “The [Chinese] government, harvesting the country’s rising nationalism and anti-American sentiment, launched a campaign to undermine Tesla’s image and push Chinese consumers to buy from domestic EV carmakers supported by the government.”

“Investing in China is no longer a solely commercial decision. It is a political choice as well,” wrote Raleigh.

“Every CEO of every American company has to realize that by investing in China, he or she is empowering an authoritarian regime that has committed gross human rights violations against its own people and remains hostile to global freedom and democracy. Participating in that is a grave disservice to their company and their country.”

Tesla Lured by China’s Huge Market

Unlike other multinational companies, Tesla’s decision to build a factory in China has been controversial from the start, as it occurred at the beginning of the U.S.-China trade war when the Trump administration was planning to transfer America’s industrial chain out of China.

Chinese authorities offered numerous favorable conditions when Tesla signed an agreement to build a plant in Shanghai, with Chinese banks granting the company preferential rates on loans totalling $1.61 billion, and the Shanghai government granting a beneficial corporate income tax rate of 15 percent. Moreover, Beijing changed its major policies with international corporations, allowing Tesla to build the plant as the first non-Chinese auto company with a solely owned subsidiary in China.

According to Xinhua, Beijing was so eager to pull Tesla into China, hoping that it would drive the development of its electric vehicle industry and, thus, China could seize the international electric vehicle market.

However, two years after Tesla entered China, having driven the rapid development of China’s electric vehicle production and supply chain, the CCP changed its attitude toward the company. It seems Tesla fell out of favor.

However, Tesla CEO Elon Musk praised the CCP on many occasions.

In a Twitter post on July 1, 2021, the CCP’s 100th anniversary, Musk wrote: “The economic prosperity that China has achieved is truly amazing, especially in infrastructure! I encourage people to visit and see for themselves.”

At the CEO Council Summit held on Dec. 6, Musk said, “We’re headed toward a situation where China is probably going to have an economy two to three times larger than the United States.”

Musk also said that in general, Tesla has a good relationship with Beijing. But he emphasized that he was not endorsing China, just as he would not endorse the United States or any other country.

Starlink Project Threatens China’s Great Firewall

According to Frank Xie, a professor of business administration at the University of South Carolina Aiken, the CCP showed interest in Musk because in addition to Tesla, he has other significant companies—particularly SpaceX.

Epoch Times Photo
A SpaceX Falcon 9 rocket with a payload of approximately 60 satellites for SpaceX’s Starlink broadband network stands pad 39A moments before the launch was scrubbed due to weather concerns at the Kennedy Space Center in Cape Canaveral, Fla., on Sept. 28, 2020. (John Raoux/AP Photo)

“The CCP has always coveted and feared Musk’s SpaceX and Starlink projects, especially the latter,” Xie told The Epoch Times in late February.

Xie believes that Starlink has the potential to help Chinese citizens bypass China’s “Great Firewall,” a censorship system.

“After the launch of 20,000 to 40,000 satellites is completed in the future, Starlink will be able to serve the whole world, providing a full range of internet services with no blind spot. It means the CCP’s ‘Great Firewall,’ built with a lot of capital and human resources, will be useless,” Xie said.

“The CCP gave Tesla favorable conditions to set up a factory in China in order to constrain Tesla, but obviously the CCP has not achieved its purpose,” Xie added.

On Dec. 3, Beijing complained to the United Nations that SpaceX’s Starlink satellites came too close to China’s space station in two separate occasions in 2021, claiming that the incidents endangered the lives of the Chinese astronauts. At the end of last year, China’s Ministry of Foreign Affairs publicly condemned Musk, and major Chinese state media followed suit.

In late December, Xinhua associated the Starlink project with the United States’ space strategy, claiming that it puts the United States in a strategic advantage in space and on the ground, posing a threat to other countries.

Xie also said the CCP is using the technology and capital from the West to strengthen its power, and will eventually turn around to engulf the West and use its communist ideology to rule the world.

Ellen Wan contributed to this report.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.


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Jennifer Bateman is a news writer focused on China.