Hong Kong Bloomberg
HSBC Holdings Plc has launched a public-relations offensive aimed at leaders in Beijing, reflecting worries that its position as the biggest foreign bank in China is at risk.
With controversies such as the US-China trade war and the Hong Kong democracy protests swirling, the effort is aimed at repairing damage from the fallout of its role in the US prosecution of Huawei Technologies Co. Persuading the rising Asian superpower of HSBC’s friendship is a commercial imperative because the London-based bank earns almost 75% of pretax profits in Greater China.
An internal presentation seen by Bloomberg News entitled “Beijing Visibility Strategy” opens with the aim: “How we protect and enhance our reputation in China against the backdrop of reputational challenges caused by the Huawei issue.”
HSBC said in an e-mailed statement Friday that the campaign “demonstrates our commitment to grow our business in China,” adding that it has a long-term commitment to China as well as key southeast Asian growth markets. “We are proud to be increasing our investment in engaging our clients and the public in China, which is at the heart of our strategy,” the statement said.
Last month, HSBC was excluded from a committee that decides China’s prime lending rates; among the expanded panel’s 18 members, Standard Chartered Plc and Citigroup Inc. are the only foreign banks. A few weeks later, HSBC missed out on a bond-underwriting license to Deutsche Bank AG and BNP Paribas SA. While far from catastrophic, the setbacks surprised some rivals, who see the bank as a long-time favourite of the local authorities.
Getting a handle on China’s opaque politics has always been a challenge, but the stakes are mounting along with global political tensions. By adding $2.5mn to its marketing budget, HSBC envisages a campaign involving social and traditional media, high-profile sponsorships and outdoor advertising.
While HSBC is fighting for China, it’s hard to overstate its dominance of the Hong Kong market. Founded in 1865 as the Hongkong and Shanghai Banking Corp, HSBC gets about one-third of its global revenue from the city of 7.5mn. It’s been a turbulent year already following the abrupt ouster of chief executive officer John Flint last month.
HSBC’s head of China, David Liao, is set to go on a relationship building tour of the editors of mainland media outlets and the bank will advertise more in the mainland press. Chairman Mark Tucker was interviewed this month on China Central Television where he expressed “complete confidence in the future of Hong Kong as a financial centre” and condemned violence of any sort.
In the marketing plan, the bank will target social-media ads to areas within 500 meters of government buildings to ensure policy makers see them. Accompanying those is an increased presence on the WeChat social media platform, with “a regular stream of WeChat moment ads,” according to the internal presentation.
The unappetising alternative to HSBC’s approach has been made plain by Cathay Pacific Airways Ltd‘s travails. The Hong Kong airline suffered its biggest drop in traffic in more than a decade in the wake of its staff joining the protests in the former British territory. State-run companies including China Citic Bank International Ltd and China Resources National Corp have banned their employees from booking flights on the carrier, people familiar with the matter have said.
Even before the Hong Kong protests broke out, HSBC had been taking a battering in the Chinese media. HSBC cooperated with the US investigation into Huawei and was singled out for contributing to the arrest of its chief financial officer Meng Wanzhou on charges of violating US sanctions. The bank has made the case that it had no choice but to help the US Department of Justice investigation of allegations that Huawei breached sanctions with Iran and Syria.
The Global Times, a Chinese state-owned paper, has reported that HSBC could be among a small group of companies placed on an “unreliable entity” list by China’s ministry of commerce related to its involvement in the Huawei case.
HSBC “longs for profits from the Chinese market while carefully seeking self-protection under pressure from US hegemony,” the Global Times quoted an analyst, Wang Yiwei, a director of China’s Institute of International Affairs at Renmin University in Beijing, as saying.
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