When companies find themselves in political crosshairs

Last week, a reader responded on twitter to my piece about how tensions in Hong Kong are affecting Swiss companies with, “man... hadn’t even thought of this! if all these people’s rights are stripped away, what might happen to my investment portfolio!?!”

The pro-democracy protests in Hong Kong began in June and intensified in the last couple of weeks. Keystone / Jerome Favre

Point taken. In my defense, a drop in sales impacts real people in Switzerland, including the more than 50,000 workers in the watch industry.

It’s true that talking about Swatch and Richemont losing out on a few mainland Chinese customers seems trivial in the bigger political context of what’s happening in Hong Kong. At the same time, the economy (or rather the threat of economic stability) has become a key political leverExternal link to quell protestors.

Foreign companies such as Swiss banks and luxury firms are now caught in the crosshairs of the tensions between pro-democracy protestors in Hong Kong and the Chinese government. As the New York Times reported, foreign companies are under growing pressure to take sidesExternal link.

Most companies seem to be taking a wait-and-see approach, hoping that stability returns, before coming out with big statements. But after the departure of the Cathay Pacific airlines CEOExternal link last week, it may not be as easy for Swiss companies to stay mum.

The greatest pressure may end up coming from employeesExternal link, as some big consulting companies in the region learned when they found an advertisement supporting the demonstrations signed by anonymous employees in the local newspaper.

Do you work for a Swiss company operating in Hong Kong? Tell me what you’re seeing. [e-mail]

And in other news:

Novartis is under fire for spending big on marketing: After a week spent on the defensive over allegedly concealing data manipulation on its $2.1 million gene therapy, Novartis was back in the news. This time, it was the Swiss health insurers calling foul, criticizing the company’s rising marketing budgets for steep drug prices.

SonntagsZeitung reported that the company’s marketing budget eclipsed researchExternal link, reaching CHF12 million in 2018. Novartis retorted that “products don’t sell themselves” but the topic is highly sensitive in an era where marketing has been associated with kickbacks and lavish conference invitations to court favour with physicians.

Political maneuvers on the Responsible Business Initiative: The initiative was also back in the news last week, as one of the Federal Councillors took an unusual moveExternal link, intervening in the ongoing debate by trying to shore up support for a milder version of the counter proposal.

The whole back-and-forth has become highly complex but it shows how much is at stake in the debate, which is expected to be back on the parliamentary agenda this fall. After nearly 200 US CEOs signed a letter of support for a broader concept of corporate responsibilityExternal link, you have to wonder if all the resistance to the initiative is out of step with where multinationals are headed.

A footwear start-up grows up: I spoke to one of the co-founders of the Swiss running shoe company On about what it has learned from Nike and Adidas, how it plans to do things differently, and what it means to be Swiss.

What is coming up? We have a couple of stories on supply chains in the works. What do you want to know about how the products you buy are produced? What other stories do you want us to cover? Send me a message – [e-mail]

Keep in touch.

Jessica