English soccer team Liverpool FC has found itself in heated debate over a cold-water deal with a Hong Kong-listed sponsor. Its troubles are a reminder of the minefield that international companies carefully tread when finding partners in Asia -- particularly China.
At issue is Liverpool's link-up with Tibet Water Resources (HK:1115), which claims to produce its flagship product, 5100 Tibet Glacial Spring Water, from mineral water that flows from a natural spring rising from deep out of the Nianqing Donggula Mountains in Tibet, at 5,100 meters above sea level.
Activists from the Free Tibet campaign have taken the sports team to task for accepting the sponsorship deal, which, as of July, made Tibet Water the "official water partner" of the soccer club in China. The cash infusion provides the water company a host of benefits, including "access to players and legends of the club," as Liverpool said in a release, and both online and social-media advertising.
The Premier League, in which Liverpool plays, is immensely popular in China, and Liverpool -- which has won the league 18 times and been crowned cup champions of Europe on five occasions -- is one of the best-supported clubs across Asia.
Free Tibet launched a campaign against Liverpool's partnership on Wednesday, as this story from the Financial Times explains. The group insists that Liverpool is effectively condoning human-rights abuses in Tibet by doing business with a Chinese company operating there.
The sponsorship from a "prestigious and well-regarded team," such as Liverpool, "lends an air of legitimacy" to China's occupation of Tibet and abuse of human rights there, John Jones, a campaign manager for Free Tibet, told the FT.
That belies the team's "progressive fan base" and "strong position on human rights," Jones added. He said he had raised his concerns with Liverpool but received no response.
Liverpool is owned by the Fenway Sports Group, the same company that owns the Boston Red Sox.
Tibet Water also brews beer made from highland barley grown on the Tibetan plateau. Besides Liverpool, it has supplied water to sports events in China -- and to meetings of the Communist Party.
The company has also been hit hard by the short sellers at Iceberg Research, which is run by researchers who work to remain anonymous. Iceberg says Tibet Water, which has a market capitalization of $1.0 billion, "shows all the signs of financial fraud," such as profitability that "does not make sense," inexplicably high margins and a high debt level -- despite financial statements that show ample cash flow.
Tibet Water has countered that the Iceberg report has "no factual basis," and contains allegations that are "false, malicious and misleading." It says it will start litigation against Iceberg's members for a report that is "maliciously misleading," and points to earnings that were audited by PricewaterhouseCoopers.
Like better-known short sellers such as Carson Block at Muddy Waters, Iceberg has targeted Asian companies -- such as the Singapore-listed commodities trader Noble Group (NOBGY) , a favorite subject of its work for the last two years.
Tibet Water says its water -- also used in the beer -- is particularly pure, coming from such an isolated part of Lhasa. The company adds that the water contains rare minerals such as lithium, strontium and meta-silicic acid. It bottles the water less than two miles from the glacier source.
Liverpool boasted of Tibet Water's role as "a Chinese company with deep roots in Tibet." The company seeks "business growth and economic development" for Tibet, as well as "supporting conservation and protection of water sources and the environment across the region," the Liverpool release states.
There's no sense from the club that Tibet, which China invaded in 1950 and has occupied ever since, could be a contentious issue.
Doing business in China -- which consistently leads the world in the number of people executed each year -- is fraught enough. With Xi Jinping firmly in control and cementing his place as the country's strongest leader since Mao, "the outlook for fundamental human rights, including freedoms of expression, assembly, association and religion, remains dire," Human Rights Watch reports.
Tibet and neighboring Xinjiang, which is 45% populated by the Uyghur people who are mainly Muslim, are overseen by Beijing and "its highly repressive rule," the rights organization states. The Chinese government suppresses political, religious and ethnic identity, the group states.
There's a saying in Chinese that the "mountains are high, and the emperor is far away" -- basically suggesting that what happens in Chinese Vegas stays in Chinese Vegas. For Liverpool, even the Tibetan mountains may not be high enough -- and for soccer teams and their sponsors, the market is very much global.