Democracy is Bad for Business

by Henry Farrell on July 16, 2014

A story that has gotten weirdly little play in the US (I can’t speak for the UK press or the press in other countries) is the pushback by the ‘Big Four’ accountancy firms against the democracy movement in Hong Kong. On July 1, “over 100,000 people marched”: in protest against Chinese plans to curtail democracy in Hong Kong. But the Big Four had not only made it clear that they didn’t like the protests – they had threatened that business would pull out of Hong Kong if the protests continued.

bq. The big four global accounting companies have taken out press advertisements in Hong Kong stating they are “opposed” to the territory’s democracy movement, warning that their multinational clients may quit the city if activists carry out threats to disrupt business with street protests. In an unusual joint statement published in three Chinese-language newspapers on Friday, the Hong Kong entities of EY, KPMG, Deloitte and PwC said the Occupy Central movement, which is calling for electoral reform in the former British colony, posed a threat to the territory’s rule of law.The group of pro-democracy activists is calling for 10,000 people to block traffic in the central business district as part of a campaign to put pressure on the Hong Kong government, although if and when this will happen is still under discussion. In the advert, the big four firms warned that protests would disrupt the Hong Kong stock exchange, banks and the headquarters of financial and professional services firms causing “inestimable losses in the economy”. It added that clients of the four firms had reflected further concerns about the wider impact of the protests: “We are worried that multinational companies and investors would consider moving their regional headquarters from Hong Kong, or indeed leave the city entirely. This would have a long-term impact on Hong Kong’s status as a global financial centre,” the joint statement said.

This is a quite remarkable initiative. It was published in Chinese rather than English – presumably both to speak more directly to potential protesters, and to make it less likely that it would seep into the English speaking press. According to one of the firms, it was pushed by local branches rather than the accountancy groups’ international management. Even if this is true, the statement is signed in the names of the firms and have not been publicly repudiated.

Of course, this isn’t the first shameful decision made by Western companies looking to build business in China – see Bloomberg’s “squashing”: of a story on corruption among family members of senior Chinese leaders, or, for that matter, Rupert Murdoch’s “instruction to Harper-Collins”: not to publish Chris Patten’s memoirs. But this goes substantially further than quiet acquiescence, to public and active opposition to the pro-democracy movement, and the issuing of threats intended to stifle it. It would be nice to see Ernst-Young, KPMG, Deloitte and Price-Waterhouse Cooper put on the spot by US politicians and journalists about their Hong Kong offices’ unrepudiated public statements opposing pro-democracy protestors.



MPAVictoria 07.16.14 at 3:03 pm

How do these people sleep at night?

/I know, I know on top of piles of money with many beautiful men/women.


Peter K. 07.16.14 at 3:18 pm

It’s interesting in that pro-democracy movements in the Middle East or the former Soviet Union are seen as fronts for Western neoliberalism but here in China it’s seen as a threat to Western neoliberalism or at least to “stability.”

China’s problem isn’t a debt bubble, it’s a democracy bubble. Via Dean Baker:

“”Retail sales are growing strongly, up 12.4 percent in June from a year earlier, according to the government figures released Wednesday, nearly matching a pace of 12.5 percent in May.”

As the article explains, real wages for factory workers are rising at more than an 8.0 percent annual rate. If that pace of real wage growth continues, the country should not have to worry about a lack of demand in the years ahead.”


david 07.16.14 at 4:26 pm

@Peter K

pretty sure China sees pro-democracy movements in Hong Kong as fronts for British/American/otherwise Westernized puppets…


odaiwai 07.16.14 at 4:33 pm

This ( is about the level of the Pro China/Establishment groups, predicting DOOOOOM if the Occupy Central protest goes ahead.

It’s exceptionally stupid when you consider that HK shuts down more or less completely for typhoons a few times every summer, with little to no long term impact on productivity or GDP.


david 07.16.14 at 4:40 pm

at the very least, it is bizarre to think of Hong Kong as so elementally neoliberal that any dissent must necessarily conceive of itself in opposition to neoliberalism. I very much suspect that a democratic self-governing Hong Kong would not reject continued existence as a tax haven/financial centre and all the wealth that this provides, as long as Hong Kong receives those benefits, rather than some arrogant Shanghai/Beijing clique.

when Occupy Central protesters wave the Union Jack or the flag of British Hong Kong, they are certainly not invoking the memory of self-government qua self-government – British Hong Kong didn’t have popular elections, either. Neither was it absent of neoliberalism, or for that matter outright colonialism. But by the 1970s the British were careful not to generate any sense that they felt entitled to rule Hong Kongers, rather than merely happening to be in power when faced with existential crisis after crisis. But the Chinese today can’t seem to persuade their own nationalists to stop scolding Hong Kong for daring to defy the motherland in the most public, provocative ways imaginable.


gianni 07.16.14 at 5:19 pm

“We are worried that multinational companies and investors would consider moving their regional headquarters from Hong Kong, or indeed leave the city entirely. This would have a long-term impact on Hong Kong’s status as a global financial centre,”

nice local economy you’ve got there; would be a shame if something happened to it.


Linnaeus 07.16.14 at 6:43 pm

Neofeudalism marches on.


Keith 07.16.14 at 10:10 pm

vile capitalist scum. Caricature is not required.


david 07.17.14 at 12:36 am

it’s certainly true that if Hong Kong’s protesters lock down Central for an extended period, Shanghai, Guangzhou, or for that matter longtime rival Singapore will all be quite happy to trumpet a relative absence of disruptive assembly. Never mind punitive measures that Beijing might retaliate with, from as simple as making financial transactions more cumbersome to as disruptive as imposing water rationing.

“if we occupy the CBD enough, Hong Kong’s elites will stop kowtowing to Beijing so much” has the flaw that Hong Kong’s elites are a global and elite bunch. And even the least global of them will still find Shanghai congenial.


PatrickinIowa 07.17.14 at 2:19 am

Deloitte is currently doing a review of the university I teach at. I’m pretty sure they’ll be trying to make it more like Shanghai.


Tim Chambers 07.20.14 at 7:13 am

American accounting firms opposed to democracy? Why are you surprised, Henry?

Opposition to democratic rule is one of the central tenets of Neo-Liberalism/Globalism. Has been for a long time. The only thing that surprises me is that they would be so bald faced about it.


FarEast 07.21.14 at 8:37 pm

Chris is yet another in a long tradition of Westerners who think they know what is best for China. Self-determination is the right of the people in China. Ten thousand, one hundred thousand, or even one million do not represent the general will of the Chinese people, as much as Chris would wish it otherwise. What he thinks Beijing should do is a nice opinion from a white western elite that is doomed to fail in a morass of debt and decline. China is not perfect, but it is for the Chinese to determine


George Berger 07.22.14 at 9:56 am

KPMG was most likely involved in the UK’s Health and Social Care Act, which set up the financial structures for the ongoing privatisation of the fine British Public Service healthcare system, the National Health Service (NHS). Here is one of many sources: . The British and Dutch divisions of KPMG were acquired by Atos Origin (since 2011, Atos), in 2002. Britnell is now the head of KPMG’s Global Health division. Some more detail is here:

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