(Bloomberg) -- Chinese brokerages in Hong Kong stepped into the furor surrounding comments by a top UBS Group AG official about a “Chinese pig,” with an industry group urging the bank to fire all people involved in the incident and a rival firm cutting business ties.
The Swiss bank and its chief economist, Paul Donovan, had previously apologized for the comment, saying it was “innocently intended.” But the Chinese Securities Association of Hong Kong, a group that represents financial institutions including the Hong Kong branches of mainland companies, demanded dismissals and a further apology. Haitong International Securities Group Ltd. said Friday it had suspended its activities with UBS.
Donovan, in a discussion of the rise in Chinese consumer prices that was mainly due to sick pigs, had asked whether that mattered. “It matters if you are a Chinese pig. It matters if you like eating pork in China,” he said in the UBS Morning Audio Comment.
The remark sparked outrage on social media sites in China, with users saying it humiliated Chinese people. At least three public accounts published articles about the report on WeChat, drawing more than 10,000 hits. Screen grabs of the report also circulated on chat groups. Some users posted a link to a UBS web page for filing complaints. State-run Global Times tweeted “UBS chief global economist Paul Donovan used distasteful and racist language to analyze China’s inflation in a recent UBS report.”
“I made a mistake and I unwittingly used hugely culturally insensitive language,” Donovan said in a Bloomberg TV interview with Francine Lacqua on Thursday, reiterating that his remarks were not intended to offend. “I apologize publicly for that.”
The escalation comes at a time when tensions in China are already running high, with hundreds of thousands of protesters rallying in Hong Kong against an extradition law, while the U.S. is stepping up threats to increase tariffs. The trade conflict in particular has heightened sensitivities, with a number of Western companies being forced to make amends in recent years.
Last year, Dolce & Gabbana postponed a runway show in Shanghai after a series of videos featuring a Chinese model awkwardly attempting to eat cannoli, pizza, and other Italian foods with chopsticks caused outrage. Messages by co-founder Stefano Gabbana insulting Chinese people and defending the video provoked a social media firestorm. Mercedes apologized after quoting the Dalai Lama -- the Tibetan spiritual leader who’s seen as a threat by Beijing -- in a China-focused Instagram post. Gap pulled a T-shirt featuring a map of China that left out territories claimed by Beijing.
The Chinese Securities Association of Hong Kong said on Thursday it “urges UBS to terminate the employment of the staff involved, and report the result to the Chinese public.” It also demanded “the management of UBS make an open and formal apology, and to ensure that such incidents will not occur again.”
Haitong International Securities suspended its activities with UBS across business divisions including corporate finance and trading, spokeswoman Mimzy Si said by phone. The firm’s Chief Executive Officer Lin Yong is also president of the Chinese Securities Association of Hong Kong. Si didn’t provide details on how much business her firm usually does with UBS.
In addition to Donovan’s apology on television, UBS also expressed its remorse. The bank has had a presence in China longer than most Wall Street firms, and was the first foreign business to receive approval for a majority stake in a local securities venture under the country’s recent financial opening push. Last year its China operations reported a net loss of 65.9 million yuan ($9.53 million), according to a company filing.
“We apologize unreservedly for any misunderstanding caused by these innocently intended comments,” UBS said in an emailed statement. “We have removed the audio comment from circulation. To be clear, this comment was about inflation and Chinese consumer prices rising, which was driven by higher prices for pork.”
The bank has also been hiring more senior executives at the joint venture. Shen Dehua, most recently investment banking head of HSBC Holdings Plc’s Qianhai securities venture, joined UBS Securities Co. as vice chairman for Asia, people with knowledge of the matter said last month, asking not to be named as the appointment hasn’t been announced. The UBS joint venture also hired Eric Zhang from a private equity arm of China Merchants Bank Co. to run its Shanghai office, according to the people.
--With assistance from Simon Lee.
To contact the reporters on this story: Benjamin Robertson in Hong Kong at firstname.lastname@example.org;Moxy Ying in Hong Kong at email@example.com;Carrie Hong in Hong Kong at firstname.lastname@example.org;Alfred Liu in Hong Kong at email@example.com
To contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, ;Sam Mamudi at email@example.com, Christian Baumgaertel
©2019 Bloomberg L.P.