Qantas’ recent concession to the Chinese government reminds us that if you want to do business with Beijing, you put up or you piss off, writes Michael Sainsbury.

Qantas chief executive Alan Joyce clearly searched high and low for options before making the inevitable kowtow to Emperor Xi Jinping in Beijing this month, agreeing to change company maps to include Taiwan — an independent, self governing, vibrant democracy — as part of the People’s Republic of China. It was inevitable because if you are, like Qantas, a foreign corporation that wants to do business in China, what Beijing wants Beijing gets. You put up or you piss off.

This was the result of demands that Beijing made to 30 foreign airlines as Xi ramps up rhetoric about getting Taiwan “back” even though, historically, the island has never been part of the People’s Republic of China. Older readers and students of history will recall similar fraudulent territorial claims by Germany in the 1930s.

Beijing would doubtless have threatened Qantas’ few flights each day to China (one to Shanghai and one to Beijing, as well as three each day to Hong Kong). More pertinently, Beijing could have threatened Qantas’ much more valuable codeshare arrangement with China Southern and China Eastern Airlines, the country’s two biggest airlines — they feed passengers from Australia’s most lucrative tourist market on dozens of flights each day into Qantas’ market-leading domestic network.

Qantas is hardly the first blue chip Australian company to grovel before Beijing (publicly and privately) and its effort is a mere bagatelle compared to the prostrations made by miner Rio Tinto after four of its sales people (including Australian Stern Hu) were locked up in Shanghai for bribery and industrial espionage in 2010. Led by its then iron ore chief Sam Walsh – who had left Hu and the rest hanging out to dry and would later be promoted to be the company’s shortest serving chief executive in living memory – Rio inked two major joint ventures with Chinalco (its 9 per cent shareholder, which is 100 per cent owned by Beijing). Rio was gulled. One joint venture, an exploration inside China, went nowhere; the other, to mine iron ore on tenements in Simandou, Guinea, later collapsed in a steaming heap of losses (all costs born by Rio). Proving that you just can’t get too much of a bad thing, they have not stopped trying. Just last night, Rio announced a new venture with another state-owned Chinese mining giant, Minmetals. Good luck with that.

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As well as these outstanding corporate kowtows, there has been a procession of Australian executives talking up the magnificence of the regime in Beijing. Mike Smith, late of ANZ, was a huge promoter. His successor, Shayne Elliott, basically canned ANZ’s China strategy, indeed its entire Asian expansion. There has been a conga line of business lobbyists turned China apologists, led, most prominently, by former foreign minister Alexander Downer. With co-lobbyists, ex-Victorian premier John Brumby and admiral John Lord, Downer shilled for telecoms group Huawei Technologies, even while ASIO made sure it was blocked from any contracts with the National Broadband Networks for fears of cyber spying.

Foreign Minister Julie Bishop continued the government’s strategy of many words and little action on the Qantas kowtow:

“Private companies should be free to conduct their usual business operations free from political pressure of governments,” she said.

At the International Air Transport Association annual general meeting in Sydney, Joyce noted that Qantas’ behavior is pretty much in line with Australian foreign policy.

“Airlines don’t decide what a country is called, governments do,” he said. “So we’re not doing anything different than the Australian government is doing in that case, and I think that’s the case for a lot of airlines.”

In a recent senate estimates hearing, Frances Adamson, Secretary of the Department of Foreign Affairs and Trade and a former Beijing envoy said,

“I just want to be clear that while we may express views in a variety of ways — sometimes very publicly, sometimes behind the scenes — the government cannot be in a position to tolerate the exercise of economic coercion.”

If that is right then, Madam Secretary, why have we not heard a peep about the dormant, long promised Free Trade Agreement with Taiwan?

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Michael Sainsbury

This article also appeared in Crikey.

Michael Sainsbury is a former China correspondent (now based in South-East Asia), with more than 20 years’ experience writing about business, business politics and human rights across Australia and the Asia Pacific.

You can follow Michael at Little Red Blog or on Twitter @sainsburychina.

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