General China Focus Switzerland

How Swiss companies cuddle up to China

Chinese artist Ai Weiwei complains that Credit Suisse is closing his account. That could only be a foretaste, because China is likely to tighten the screw for foreign companies further.

Read here the original article by Jorgos Brouzos, published on 09.09.2021, at derbund.ch. Photo: Urs Jaudas

Anger and frustration speak from his text. The Chinese artist Ai Weiwei complains about Credit Suisse in a blog post. The bank terminated his account because they believed he was convicted in China. This is because the bank is closing all accounts with previously convicted customers, says Ai Weiwei.

According to his own statements, however, the artist was never formally charged or convicted of a crime. The major Swiss bank did not comment on a request.

It seems particularly peculiar that, according to Ai Weiwei, it is not his personal account, but that of the Swiss Fart Foundation founded six years ago. It is based in Lucerne, with Ai Weiwei serving as its president. The purpose of the foundation means that it wants to promote freedom of expression. This through the establishment, initiation, support and promotion of art exhibitions with works and projects.

Obviously, the business relationship is delicate for the bank, because there is a lot at stake for them in China. The ambitions are great. The workforce there is to be tripled in the next three years. Credit Suisse also wants to take over all of its joint venture with securities business as soon as possible. She has owned the majority of the shares for a year.

Influential Chinese on the board of directors

The Chinese Shan Li is particularly important for the expansion course. He has been on the Board of Directors at Credit Suisse for two years. Other Swiss companies such as Nestlé, UBS or Swiss Re also have boards of directors close to the Chinese party state, as Ralph Weber, China expert and professor at the University of Basel, recently showed in a study.

However, according to Weber, Credit Suisse has hired a particularly influential representative in Shan Li: "He made a steep climb in the financial sector and is well connected in China." For example, Shan Li is a member of the Communist Party's most important advisory body.

“In Switzerland, companies believe that political engagement is a private matter that doesn't interest them. Such an attitude is fatal in the context of the People's Republic. "

Ralph Weber, professor at the University of Basel

Among the CS shareholders, Shan Li was undisputed at the last general meeting. Most of the board members were punished because of the Archegos crisis, but his share of the vote was still comparatively high. Nor was it viewed critically that he founded a pro-mainland China party for Hong Kong in Beijing.

“In Switzerland, companies believe that political engagement is a private matter that doesn't interest them. Such an attitude is fatal in the context of the People's Republic, ”says Ralph Weber. "By hiring such people, one would like to secure access to the Chinese market."

But the price is probably underestimated. "The Chinese party state will exert its influence over time," said Weber. A predicament arises that makes it more and more difficult for companies to act independently.

"The party is again increasingly at the center of the private sector."

Ralph Weber, professor at the University of Basel

Some Swiss companies that are active in China will have to ask themselves unpleasant questions. "The party is again increasingly at the center of the private sector," says Weber. This could soon lead to even greater conflicts of interest. For example, if the geopolitical tensions between the USA and China continue to escalate: “Do you have to choose one or the other market?” Says Weber.

The People's Republic has recently passed several laws with extraterritorial scope. They also punish behavior outside of China. These include the Hong Kong Security Act or the Anti-Sanctions Act. This makes the situation even more delicate for Swiss companies doing business in China.

Old statements become a risk

Even thoughtless statements from a few years ago can become a problem for Swiss companies in China today. The Swiss watch brand Audemars Piguet felt this. According to the industry portal “Business of Fashion”, the Chinese actor and singer Lu Han no longer wants to advertise the company. This is because Audemars Piguet boss François-Henry Bennahmias praised Taiwan to the watch portal “Watchonista” in May 2018. He said Taiwan was "an ultra-modern, high-tech country."

For Lu Han, who also promotes Cartier and Gucci, Audemars Piguet has violated the one-China principle. It was no longer of any use that the Swiss watch manufacturer tried to limit the damage via Chinese social media: “We apologize deeply for the latest false statement. Audemars Piguet always adheres to the one-China position and resolutely protects the national sovereignty and territorial integrity of China. "

Letter to the editor in this regard from Hans Marty

published in the federal government on 11.09.2021

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