Elon Musk’s China ties add potential risks to Twitter purchase

BEIJING

Elon Musk’s connections to China via his role as the largest shareholder of Tesla’s electric car brand could complicate his bid to purchase Twitter.

Other companies seeking access to China will give in to Beijing’s demands for Taiwan and other issues. Twitter is blocked by most Chinese internet users, which means that Beijing has no influence over it, even though it uses it to spread propaganda around the world.

Tesla Inc.’s ambitions in China might give Beijing that leverage to pressure Twitter to silence human rights activists and other critics or ease its rules on propaganda if Musk’s US$44 billion purchase goes ahead, some experts suggest. China bought half of the Teslas that were sold in 2013. Its busiest factory and “main export hub” is in Shanghai.

“The Chinese exert tremendous leverage over businesses,” saidAnne Stevenson Yang of J Capital Research. “If you care about the Shanghai operation (of Tesla), then you’re going to put everything else in service to that.”

Musk says he sees “no indications” Beijing might use Tesla as leverage, but other companies don’t wait for government orders. Automakers, clothing brands and others take pre-emptive action to protect their access to China by changing marketing or products sold worldwide to reflect official positions such as the ruling party’s claim that self-ruled Taiwan is part of its territory.

Musk saidFriday, his offer was suspended because he tried to verify whether the number Twitter accounts that have no real users was below 5% as stated by the company.

He will speak on Monday said at a business conference in Miami that a deal at a lower price wasn’t “out of the question,” Bloomberg News reported. This was in line with industry analysts’ suggestions that Musk wanted to cancel the deal or lower the price due to the decline in the value Tesla sock. Some of these he has promised to finance the purchase.

Trying to use an investor’s stake in one company to pressure a different company outside China would be a new tactic. But foreign investors know the ruling party is increasingly assertive about defending its “core interests” worldwide and attacks global brands even when that imposes costs on China and its public.

Officials have warned companies must “respect the feelings of the Chinese people” and avoid “eating Chinese rice while smashing Chinese bowls.”

Some people have given up their Chinese opportunities to avoid government surveillance and censorship. Others are more likely to suffer consumer backlash from abroad for human rights violations. More common are companies such as hotel operator Marriott, which in 2018 fired an employee who “liked” a Twitter post praising a customer survey outside China that called Tibet a country.

Regulators have the power to put pressure on automakers by preventing them from increasing their output and then ordering them not to speak out about it. State media called for boycotts of South Korean, Japanese, and other brands in disputes with their governments.

According to LMC Automotive. Tesla’s China sales increased 226% last year, to 473 600 vehicles. This was approximately half of the 935,222 global deliveries.

Musk, who is Tesla’s chairman, was asked about the possibility the automaker might be used by Beijing as leverage over Twitter while appearing virtually at a May 11 event hosted by The Financial Times newspaper on the auto industry’s future.

“I’ve seen no indications to that effect,” Musk replied.

Musk said he expects China to be 25% to 30% of Tesla’s market in the long term.

The billionaire South African-born billionaire said he doesn’t see another Tesla factory in China in the near term but the company will expand in Shanghai.

The company, headquartered in Austin, Texas, didn’t respond to questions by email about its expansion plans.

Tesla’s opening of a showroom at Xinjiang in northwest China was criticized by human rights activists despite concerns about abuses against the ethnic Muslim community living there. This is not the only company that has a facility in the region. Volkswagen AG and other global brands also have outlets there.

Musk says he wants to make Twitter a “politically neutral” forum for as much free speech as each country’s laws allow.

He hasn’t said what he might do about Twitter’s requirement that accounts of China’s state media and officials must be labelled “state-affiliated.” Scrapping that or curbs on inflammatory speech might make it easier for Beijing or other governments to influence American public opinion during elections.

China Daily reporter wants the tag removed.

“Elon Musk should remove my label,” Chen Weihua wrote on Twitter on April 30. “This is totally discriminatory and suppression of free speech.”

Some companies cannot find a compromise between Chinese pressures and international outrage over allegations of forced labor in Xinjiang or other abuses.

Last year, state media called for a boycott of Swedish clothing retailer H&M and other brands that stopped using cotton from Xinjiang. Despite the loss of sales, most people remained firm in their positions, perhaps fearing more from an international consumer backlash.

Some companies don’t want to be seen to “carry the water for the government,” saidLester Ross, Head of the Beijing Office of Washington law firm WilmerHale.

Official data shows that China has just over 1 Billion internet users. However, most people cannot access Twitter or other social media sites abroad, as well as thousands of websites owned by news outlets, pro-democracy activists, and human rights advocates.

China has its own social media, which is heavily censored. They must delete any material they deem to be subversive or pornographic.

Sina Weibo claims to have 573 million monthly active users. That’s more than twice Twitter’s 229million. Tencent’s WeChat messenger service claims that it has 1.2 billion users every day.

Since 2012, President Xi Jinping has been steadily tightening the controls.

Accounts managed by support groups for young lesbians and gay men have been closed. All complaints regarding food shortages during the virus outbreaks in Shanghai were closed.

After the lifting of ownership restrictions in the sector, Tesla became the first foreign automaker that set up its own factory. Global automakers previously had to work with state-owned partners, who assembled their cars.

Tesla’s honeymoon included access to subsidies for buyers of electrics and an exemption from sales tax. Tesla was exempted from the subsidies in 2020, which were extended to the industry to combat the pandemic. NIO however, its closest Chinese competitor, was eligible.

Musk is well-known for his extravagant gestures, including smoking marijuana while he speaks on radio. He is also sensitive to Chinese sensibilities.

He said that California’s anti-virus laws had disrupted Tesla production. saidNothing was made public after the closure of Shanghai’s factory.