Hedge fund manager Kyle Bass, a frequent critic of the Chinese Communist Party, on Thursday blew up American companies that speak out against social injustices in the US but do not take firm positions on human rights violations in China.
“If the US national security were left to the American corporation, we will all speak Chinese very quickly,” said the founder of Hayman Capital Management from Texas in the “Squawk Box” of CNBC.
In particular, Bass ripped off Nike CEO John Donahoe for comments made during the company’s conference call with Wall Street analysts last week.
According to a FactSet transcript, Donahoe said, “We have been in China for over 40 years. Phil [Knight] In the early days we invested a lot of time and energy in China, and today we are the biggest sports brand there, and we are a brand for and for China. “Knight co-founded Nike under the name Blue Ribbon Sports in 1963.” We have a strong consumer franchise in China and they feel very attached to our brand, so we will keep investing, “added Donahoe.
Bass described the comments as “actually pretty incredible”. He added, “Look, his job is to maximize profitability. They are social justice fighters wherever they see fit until it hits their wallet.”
Nike faced backlash earlier this year after it said in a statement it was “concerned” about allegations of forced labor in Xinjiang, a western region home to Uighur Muslims and other ethnic minorities.
In January, 24 hours before Joe Biden was sworn in as president, then Secretary of State Mike Pompeo described the Chinese government’s treatment of the Uyghurs in Xinjiang as “genocide.” Former President Donald Trump’s administration also took a hard line on trade with China – it raised tariffs on Chinese imports leading to reciprocal taxes on US imports there before a first-stage trade deal was reached in early 2020.
In March this year, the Biden government also sanctioned two Chinese government officials for their alleged role in “arbitrary detention and aggravated physical abuse, among other serious human rights violations against Uyghurs.”
In addition to China’s crucial role in supply chains, the country has become an important consumer market for many American companies. With a population of 1.4 billion, China is the second largest economy in the world.
Despite its economic boom since opening up to Western investment in the post-Mao era, China is not a democracy, and Beijing’s extensive control of the economy puts businesses, especially American firms, in a delicate position, the wrath of the Chinese government.
Bass said trying to walk the fine line between staying in President Xi Jinping’s economic benevolence and growing voice on societal issues in the US is hard to pinpoint.
“Whether LeBron James, Nike or Disney, they’ll be social justice campaigners here in the US because it’s fashionable,” said Bass, who became famous for his successful sub-prime mortgage bet during the 2008 financial crisis.
“When it comes to a regime that the US State Department has labeled genocide and crimes against humanity, their lips are sealed,” he added. “They are actually from China, for China.”
Nike, representatives from James and Disney did not immediately respond to CNBC’s request for comments.
James, an NBA superstar who had a long-running advertising deal with Nike, was criticized in 2019 for his response to the controversy surrounding then-general manager of the Houston Rockets, Daryl Morey. Morey’s tweet in support of pro-democracy protesters in Hong Kong was heavily repulsed by the Chinese government.
The Los Angeles Laker had said he didn’t feel well enough about the tension between Hong Kong and mainland China to be right. Many considered this to be an inappropriate position as James had spoken out against police violence and racism in the US in the past. More recently, James has campaigned for the right to vote.
Last year, Disney was hot because he thanked government agencies in the Xinjiang area for his remake of “Mulan” in the final credits.
Christine McCarthy, Disney’s chief financial officer, defended the move as usual, saying it was common practice in the film industry to recognize “the national and local governments that allow you to film there.” The credits “recognized both China and locations in New Zealand. And I would leave it at that, but that created a lot of problems for us,” she said at a Bank of America conference in September.
Bass said Washington leaders need to show “leadership” in Beijing’s human rights abuses because US corporations will not stop pursuing “the gold” that is the gateway to the Chinese economy.
“It requires the State Department, the Department of Commerce, the National Security Complex, the National Security Council to come together and actually make some difficult decisions. Don’t just lead with rhetoric and don’t do anything on the other side because corporate America won’t. “Stop chasing profits,” he added.