On June 16 the French-based satellite company Eutelsat took a very public step further along an unfortunate business track: The company stopped broadcasting the TV signal of one of its customers—in other words, Eutelsat didn’t deliver the product that it had been paid for.
The company’s official explanation was a “technical anomaly” in the power supply system of the W5 satellite required them to shut down transponders, units that are necessary to beam the TV network’s signal into China.
The victimized customer is NTDTV, the only TV network that broadcasts uncensored information in Chinese into China. The interruption of its broadcasting into China happened at a sensitive time. People in Mainland China, used to censored information, have learned to appreciate the uncomplicated and uncensored news from NTDTV.
NTDTV’s audience has complained vigorously about the loss of signal. And why should they not? NTDTV informed the people about how Chinese officials chose not to warn the people about the imminent earthquake. NTDTV warned the Chinese people about SARS weeks before Chinese officials would admit its existence. NTDTV has been providing accurate information about the growing unrest in today’s China.
The signal was stopped only one month after the Flushing incident, where the New York police department had to deploy to protect from mobs encouraged by the Chinese Consulate Falun Gong practitioners who volunteer to help Chinese people quit the Chinese Communist Party (CCP).
The signal was stopped only a few weeks before the Olympic Games.
The shutting down of NTDTV’s broadcast to China is not a coincidence. Despite the “power anomaly,” Eutelsat was able to switch other transponders on and off, while NTDTV’s signal remained off.
Eutelsat didn’t inform NTDTV when the broadcasting of its TV signal was stopped nor did it provide a detailed explanation of the “anomaly” or a plan for solving the problem—all criteria for corporate professionalism.
These actions raised questions about Eutelsat’s good faith, questions that only deepened on July 10: Reporters Without Borders (RSF) released a transcript of a conversation with a Eutelsat employee in Beijing that had been recorded by RSF’s investigator.
The employee volunteers that the so-called “anomaly” is part of a plan by Eutelsat’s CEO, M. Berretta.
“It was our company’s CEO in France who decided to stop NTDTV’s signal,” says the employee, according to the RSF transcript.
The transcript indicates M. Berretta wished to use the shutdown of NTDTV as a way to help Eutelsat get its foot in the China market. This doesn’t sound like a technical “anomaly” but rather like a strategic business decision.
Well, there is nothing wrong with making a strategic business decision, but breaching the contract of a business partner, and even cheating one, are not simple matters. Besides the legal issues involved, such behavior destroys the trust among business partners necessary for commerce to exist.
Eutelsat, by selling out its own corporate principles, is facing a huge loss in prestige and jeopardizing its own future in a hard fought market. M. Berretta intended to please Chinese officials by voluntarily reneging on an agreement with a customer that is a thorn in China’s side, but his actions will now have consequences for his company he didn’t intend.
Eutelsat is just the tip of the iceberg of a phenomenon that is often seen when dealing with today’s business marketplace in China. Companies court their customers in the U.S. by proclaiming corporate values that are simultaneously sacrificed when doing business in China.
For instance, internet companies who promote freedom of information in the U.S. cooperate with the censorship imposed by the Chinese regime in order to enter the Chinese market. Yahoo! even provided the contact information of dissidents to the Chinese government, which led to their imprisonment.
Such behavior would be unthinkable in the U.S. market, but perhaps the values needed for doing business in the U.S. don’t travel well to China? Did Yahoo! sell out moral and corporate values, or did it merely conform to what may be the norm for international companies trying to do business in China?
If getting companies to betray their own principles for the sake of a chance at the China market is a sign of success, then the Chinese model seems to work. But don’t be deceived. The RSF recording seems to show Eutelsat cheating and lying in its dealing with NTDTV. But if this was in fact a gambit by Eutelsat, it appears to be one that Eutelsat is losing.
Consider the Olympic Games. The Chinese regime pledged to the International Olympic Committee in 2001 that it would improve human rights in China, and this bargain led the IOC to seal the deal for the 2008 Beijing Olympics. Since then there has been a bloody crackdown in Tibet, a dramatic increase of the arrests of Falun Gong practitioners in the run-up to the Games, severe restrictions on journalists, and a crack down on mounting civil unrest.
In fact, the Chinese regime did not change its values. The Chinese regime has instead forced the International Olympic Movement to sacrifice its own Olympic Charter. Whether Eutelsat, Yahoo!, or the IOC, doing business with the Chinese regime means sacrificing one’s own principles. But anyone can see this simple truth: a business deal in which a business loses its corporate identity cannot succeed.
Thomas Kleiber is a writer living in Washington, D.C.