(chinese simplified pinyin azerty 0059 by Marcin Wichary – CC BY 2.0)
Marriott set off a firestorm in China in January. Chinese public opinion rallied against the company, and government regulators temporarily shut down their website and apps.
The source of this conflict was simple – an email and a Twitter ‘like’ that suggested Marriott disagreed with China’s position on its sovereignty and territorial integrity.
This incident represents a microcosm of the obstacles that Marriott faces in China. In China, cultural competency is key. But Marriott’s apology and rectification steps sparked a backlash from critics of China in the U.S. Going forward, will Marriott be able to avoid similar incidents? And will Marriott be hemmed in by the conflicting demands of public opinion and governmental demands in China and the U.S.?
What did Marriott do to roil Chinese public opinion?
In January 2018, Marriott sent an email survey to Chinese customers. A question on the survey listed Taiwan, Tibet, Hong Kong, and Macau as countries separate from China.[i] China’s Foreign Ministry has made it clear that the ‘one-China principle’ – that the government in Beijing is China’s sole legitimate government – is non-negotiable, and that anyone who attempts to undermine this principle will face broad and strong opposition from the Chinese government and people.[ii]
The Chinese government forcefully pushed back. After the survey question came to light, Lu Kang, a spokesperson for the ministry of foreign affairs, stated at a press conference, “We welcome foreign enterprises to do business in China. Meanwhile, they should respect China’s sovereignty and territorial integrity, abide by Chinese law, and respect the Chinese peoples’ feelings, which are the foundation for any corporation to do business in any country.”[iii] Chinese netizens called for boycotts against Marriott on Chinese social media platforms.[iv]
The furor escalated after “Friends of Tibet”, a pro-Tibetan independence group, congratulated Marriott on Twitter for listing Tibet as a country. An official Marriott Twitter channel ‘liked’ the post, compounding the situation.[v] The Communist Youth League, a youth group run by the Chinese Communist Party, posted about Marriott’s action from their official account on Weibo, China’s popular Twitter-like platform.[vi]
Marriott’s response: official apology and termination of low-level employee
Marriott complied with a Chinese government request to shut down its websites and apps in the country.[vii] The company stated that it proactively suspended posting on its global social media accounts while it dealt with the matter.[viii] CEO Arne Sorenson issued an abject public apology that noted, “Marriott International respects and supports the sovereignty and territorial integrity of China…we don’t support anyone who subverts the sovereignty and territorial integrity of China and we do not intend in any way to encourage or incite any such people or groups. We recognize the severity of the situation and sincerely apologize.”[ix]
Marriott’s president and managing director for Asia-Pacific Craig Smith acknowledged the severity of the situation: “This is a huge mistake, probably the biggest of my career.” Marriott announced an eight point ‘rectification plan’, which steps included expanding employee education globally, creating straightforward complaint channels for Chinese customers, and more strictly supervising the work of third-party agents for projects largely targeting the China market.[x]
Marriott meted out consequences for both the survey and the Twitter ‘like’. The contractor that put together the survey was terminated.[xi] The low-level employee who liked the Twitter post, Nebraskan Roy Jones, was fired. Jones later stated that he had received zero training on how to handle issues that might inflame the Chinese government, and that the offending tweet was liked for nearly a day before anyone above him noticed.[xii]
Marriott later removed a display book from the lobby of one of its China hotels. The controversial book, entitled “Bloody Harvest: the Killing of Falun Gong for Their Organs,” was based on a research report by former Canadian lawmaker David Kilgour and human rights lawyer David Matas.[xiii]
Backlash in the United States
While Marriott faced a backlash in China, it also received withering criticism in the U.S. Pundits used the incident to criticize China, and exemplified Marriott as a bad actor.
Robert Daly, director of the Wilson Center’s Kissinger Institute on China and the United States, said that Smith’s apology was dangerous: “His apology is so abject that it could well become a standard which Beijing requires all future offenders of China to meet.”[xiv]
Eric Goldman, co-director of the High-Tech Law Institute at Santa Clara University in California, expressed concern about the termination of the employee who liked the offensive tweet: “If this were his first strike, the employee effectively is a sacrifice to try to get Marriott back in the good graces of China.”[xv]
Perhaps the most high-profile critique of Marriott in the U.S. came from Senator Marco Rubio, who said in a tweet, “This is the long arm of China. They can get an “American” company to fire an American worker in America.”[xvi]
Marriott caught in the middle
In the wake of this embarrassing episode, Marriott found itself caught between Chinese public opinion, which it relied on to grow its business in China, and a backlash in the U.S., which condemned the company for acknowledging Chinese political sensitivities.
With President Trump escalating tensions with China over trade, the potential consequences for incidents like this could be greater.
Arne Sorenson told investors that he didn’t expect there to be a measurable impact to Marriott’s financial results after the incident.[xvii] Whether that prediction turns out to be true will be revealed on May 8th, when Marriott releases its earnings results for the first quarter.[xviii]
Investors should be asking questions of Marriott about its handling of this incident.
- What is Marriott’s path forward in China? Can they reclaim lost ground?
- Has Marriott incurred risk in the U.S. by its over-the-top apologies?
- Since the survey was put together by a contractor, has Marriott considered the risks posed by using third parties as part of its communications to China?
- Have the rectification steps that Marriott announced in January been implemented?
[i] Teddy Ng, “Marriott sacks employee who ‘liked’ Twitter post from Tibet independence group,” South China Morning Post, 1/13/18. http://www.scmp.com/news/china/society/article/2128124/marriott-sacks-employee-who-liked-twitter-post-tibet-independence.
[ii] Nomaan Merchant, “‘One China principle’ not negotiable, China tells Trump,” AP News, 1/16/17. https://apnews.com/37f0637a4661475bb61a47b0a77b423b.
[iii] “Foreign enterprises should respect China’s sovereignty, territorial integrity: FM,” China Daily, 1/12/18. http://www.chinadaily.com.cn/a/201801/12/WS5a5898afa3102c394518ee88.html.
[v] Neil Connor, “China shuts down Marriott website for a week after hotel chain listed Tibet and Hong Kong as countries,” The Telegraph, 1/12/18. https://www.telegraph.co.uk/news/2018/01/12/china-shuts-marriott-website-week-hotel-chain-listed-tibet-hong/.
[vi] “Chinese probe into Marriott hotels over geography gaffe in customer survey,” South China Morning Post, 1/11/18. http://www.scmp.com/news/china/policies-politics/article/2127800/chinese-probe-marriott-hotels-over-geography-gaffe.
[vii] Abha Bhattarai, “China asked Marriott to shut down its website. The company complied.,” Washington Post, 1/18/18. https://www.washingtonpost.com/news/business/wp/2018/01/18/china-demanded-marriott-change-its-website-the-company-complied/?utm_term=.f12a5b4f362f
[viii] Dani Deahl, “Marriott says it chose to stop posting on social media after China ban,” The Verge, 1/18/18. https://www.theverge.com/2018/1/18/16906206/marriott-social-media-shut-down-china-territories-countries-survey
[ix] Arne Sorenson, “Statement from Arne Sorenson, President and CEO, Marriott International, Inc.,” Marriott News Center, 1/11/18. http://news.marriott.com/2018/01/statement-from-arne-sorenson-president-and-ceo-marriott-international-inc/.
[x] Xu Junqian, “Marriott announces ‘rectification plan’ to regain trust,” China Daily (via Google cache), 1/18/18 (retrieved 4/11/18). http://webcache.googleusercontent.com/search?q=cache:3Fr88YufaXEJ:www.chinadaily.com.cn/a/201801/18/WS5a600374a310e4ebf433e9ac.html+&cd=1&hl=en&ct=clnk&gl=us.
[xi] Wayne Ma, “Marriott Employee Roy Jones Hit ‘Like.’ Then China Got Mad,” Wall Street Journal, 3/3/18. https://www.wsj.com/articles/marriott-employee-roy-jones-hit-like-then-china-got-mad-1520094910.
[xii] Matthew Hansen, “Omaha man ‘liked’ a tweet, and then he lost his dream job,” Omaha World-Herald, 3/21/18. http://www.omaha.com/columnists/hansen/hansen-omaha-man-liked-a-tweet-and-then-he-lost/article_74b9021a-3753-5b33-b096-f0af3c8372d6.html.
[xiii] “Marriott Pulls Banned ‘Books’ From China Hotel to Avert Backlash,” Bloomberg News, 1/16/18. https://www.bloomberg.com/news/articles/2018-01-16/marriott-pulls-banned-books-from-china-hotel-to-avert-backlash.
[xiv] Abha Bhattarai and Steven Mufson, “Marriott and other firms bow to China to protect business interests,” Washington Post, 1/19/18. https://www.washingtonpost.com/business/economy/marriott-and-other-firms-bow-to-china-to-protect-business-interests-there/2018/01/19/af797a98-fb98-11e7-a46b-a3614530bd87_story.html?utm_term=.59847e6e533e
[xv] Wayne Ma, “Marriott Employee Roy Jones Hit ‘Like.’ Then China Got Mad,” Wall Street Journal, 3/3/18. https://www.wsj.com/articles/marriott-employee-roy-jones-hit-like-then-china-got-mad-1520094910.
[xvi] Marco Rubio (@marcorubio), “An American worker was fired by @Marriott for accidentally “liking” a tweet about #Tibet after pressure came from #China communist government. This is the long arm of China. They can get an “American” company to fire an American worker in America,” Twitter, 3/25/18, 7.31 AM. https://twitter.com/marcorubio/status/977915812890759169.
[xvii] Transcript of 4Q17 earnings call, Marriott, 2/15/18, p. 20. http://files.shareholder.com/downloads/MAR/5691911320x0x972253/9A46AEDC-4AEF-4222-85AB-2B1F85543903/MAR_Q4_Earnings_TRANSCRIPT_FINAL_2-15-18.pdf.
[xviii] “Marriott International Announces Release Date For First Quarter 2018 Earnings,” Marriott News Center (press release), 4/2/18. http://news.marriott.com/2018/04/marriott-international-announces-release-date-for-first-quarter-2018-earnings/.