As China steps up enforcement of sovereignty claims, does Marriott have room to maneuver?

In January Marriott communicated with Chinese customers in a manner that suggested that Taiwan, Hong Kong, and Macau were countries separate from China.  Marriott quickly issued an abject apology but not before China’s Cyberspace Administration demanded that Marriott temporarily shut its website and mobile app to Chinese residents.

In April Chinese aviation authorities directed 36 international airlines to amend their websites to reflect China’s sovereignty claims over Taiwan, and to accurately show the status of Hong Kong and Macau as Chinese territories.[1]

Did Marriott’s unreserved apology make it difficult for the company to retain some flexibility in what appears to be unsettled ground for US based companies operating internationally?

Various labeling systems remain

In Marriott CEO Arne Sorenson’s fulsome apology for the email blunder, he listed steps that Marriott had taken to correct the error. This included, “We also reviewed the other areas on our websites and apps where this type of functionality might exist to make sure the labeling is correct.”[2]

However, a look at the hotel directory on Marriott’s North American (US and Canada) website shows that Marriott still lists China separately from Macau and Taiwan.[3]

The Asia section of Marriott’s hotel directory lists China, Macau, and Taiwan as separate countries.[4]

Arne Sorenson himself has described Chinese regions differently to different audiences. In the Q1 2018 earnings report call with analysts, Sorenson listed the biggest markets for Chinese outbound travel as including Macau and Hong Kong. The list also included Indonesia, Thailand, and Australia, eliding the distinction between these Chinese regions and other countries.[5]

China steps up enforcement

Some international companies have struggled to fully comply with new Chinese rules related to the labeling of territories.  In May, the Wall Street Journal reported that a letter sent by the Civil Aviation Administration of China said some airlines were still guilty of violating the laws of China related to correct labeling of various territories and said they would be liable for punishment unless they swiftly comply.[6]

The Chinese Foreign Ministry has called for foreign companies operating in China to respect the country’s sovereignty and territorial integrity: “Whatever the US said cannot change the fact that there is only one China in the world and Hong Kong, Macau and Taiwan are indispensable parts of Chinese territory,” Geng Shuang, the Chinese foreign ministry spokesman said.[7]

Several major airlines have changed their references to Taiwan on their websites, according to Business Insider. Malaysia Airlines no longer refers to Taiwan as a country on its booking form, a change first noticed by Business Insider in May. A Globe and Mail journalist also spotted Air Canada’s shift in its naming of Taiwan: all mention of Taiwan as the country had been replaced by “CN,” the abbreviation of China, with no mention of Taiwan. Lufthansa and British Airways changed their websites to no longer refer to Taiwan separately from China.[8]

The White House sharply criticized China in a statement: “President Donald J. Trump ran against political correctness in the United States. He will stand up for Americans resisting efforts by the Chinese Communist Party to impose Chinese political correctness on American companies and citizens.”[9]

If China applied the airline policy to US-based hotel companies like Marriott, that would imply changes in Marriott’s reporting of countries on its US website.

 

[1] Trefor Moss, “China’s Plane ‘Nonsense’ or Sovereign Right? The Airline Map Flap,” Wall Street Journal, 5/7/18. https://www.wsj.com/articles/chinas-plane-nonsense-or-sovereign-right-the-airline-map-flap-1525696597.

[2] “Statement from Arne Sorenson, President and CEO, Marriott International, Inc.,” Marriott News Center (press release), 1/11/18. http://news.marriott.com/2018/01/statement-from-arne-sorenson-president-and-ceo-marriott-international-inc/.

[3] Hotel Directory, Marriott.com, retrieved 5/30/18. https://www.marriott.com/hotel-search.mi.

[4] Hotel Directory, Marriott.com, retrieved 5/15/18. https://www.marriott.com/hotel-search.mi.

[5] Marriott International First Quarter 2018 Earnings Conference Call Transcript, 5/9/18, p. 16. https://marriott.gcs-web.com/static-files/0eae8e59-7bad-4991-881d-b2778424c00f.

[6] Trefor Moss, “China’s Plane ‘Nonsense’ or Sovereign Right? The Airline Map Flap,” Wall Street Journal, 5/7/18. https://www.wsj.com/articles/chinas-plane-nonsense-or-sovereign-right-the-airline-map-flap-1525696597.

[7] Vicky Xiuzhong Xu, “China hits back after White House slams territory warning to global airlines as ‘Orwellian nonsense’,” ABC (Australian Broadcasting Corporation), 5/7/18. http://www.abc.net.au/news/2018-05-07/china-retaliates-after-white-house-slams-its-warning-to-airlines/9734026.

[8] Tara Francis Chan, “Four major airlines quietly changed their references to Taiwan — and it shows just how much power China has over foreign companies,” Business Insider South Africa, 5/16/18. https://www.businessinsider.co.za/air-canada-malaysia-airlines-references-to-taiwan-2018-5. The references to Taiwan are not consistent on the British Airways and Malaysia Airlines websites. On British Airways’ route network directory, the company includes Taiwan as a separate country (see Route Network Country List, British Airways, retrieved 6/6/18. https://www.britishairways.com/en-us/information/flight-information/our-route-network). Malaysia Airlines has a destination page for Taipei titled “Taipei, ROC” (“Taipei, ROC,” Malaysia Airlines, retrieved 6/6/18. https://www.malaysiaairlines.com/us/en/destinations/asia/flights-to-taiwan/flights-to-taipei.html).

[9] “Statement from the Press Secretary on China’s Political Correctness,” White House, 5/5/18. https://www.whitehouse.gov/briefings-statements/statement-press-secretary-chinas-political-correctness/.