The fast-fashion brand Zara is the latest company caught in the crossfire surrounding the pro-democracy protests in Hong Kong. It is scrambling to defend itself against accusations of supporting the Hong Kong demonstrators by keeping four stores closed on a demonstration day.
Zara has 12 stores in Hong Kong. Four in the heart of the city were closed for business on Monday morning, although the stores in suburban locations continued business as usual. The pro-democracy protestors called a two-day strike on Monday and Tuesday, the first two days of the academic year for government schools, with many students attending demonstrations instead of class.
The attempt to discredit Zara fits the tactics of "white terror" -- indirect or anonymous attacks designed to create a climate of fear over the demonstrations -- that China has now deployed in an attempt to quell the dissent in Hong Kong. The state-run Global Times newspaper, used by Beijing to promote its viewpoint overseas, said Zara is "suspected of catering to" the strikes and has "set a very negative example."
"Objectively, it (Zara) has formed some kind of response expected by the extremist forces," the newspaper says, highly subjectively. Zara is clearly not in line with Hong Kong society "to stop violence and restore order," the newspaper stated.
All that from four stores opening a little late.
Zara said in a Chinese social media post on Weibo that it "never expressed any views or took any actions" supporting the strike. Still wincing from an episode in which it listed Taiwan as a separate entity from China on its e-commerce site, it said it supports China's sovereignty.
While these attacks work amazingly well in China, where the media is state-controlled, it's not yet clear how the white-terror tactics to eliminate dissent will go down overseas. Besides this overt editorial content, there's plenty of other busying by Beijing to paint Hong Kong's pro-democracy demonstrators as radical rioters directed by the CIA and Britain's MI6.
YouTube pulls a lot of plugs
YouTube has now disabled 210 channels that had uploaded coordinated disinformation about events in Hong Kong. YouTube, owned by Alpahbet Inc. (GOOGL) , follows Twitter Inc. (TWTR) and Facebook Inc. (FB) in taking down content that purportedly came from individual users whom the companies concluded were actually fronts for Chinese government propaganda. Twitter said it has "reliable evidence to support that this is a coordinated state-backed operation."
The Zara attack is weird enough that it should backfire. Zara is run by Spanish parent company Inditex (IDEXY) , the world's largest fashion retailer. I doubt any management at any level of this Galician company has taken a strong stance on the protests in Hong Kong. Its shares haven't budged much, down 1.2% in this week's trade. But they're worth watching if an online boycott, already launched in China, intensifies.
Zara may well have simply taken the very sensible step of closing stores near increasingly violent demonstrations, as many other companies have done. Reuters quoted a source explaining that the stores delayed opening because staff had trouble getting to work due to strike-induced transport disruption, and that all stores eventually opened later on Monday.
The Global Times instead jumps to the conclusion that the management of Zara Hong Kong is "willing to make a special show" of supporting the strikers and thinks "some of the risk is worth it."
"Zara needs to make a solemn explanation and correct its own practices, giving a serious response to those who are patriotic to Hong Kong and China as well as the general public on the mainland," the Global Times opinion piece said. It's bizarre enough to be worth a read.
White terror on the rise
There are other forms of white terror. The Hong Kong police timed seven arrests of prominent activists such as Joshua Wong and even three Hong Kong lawmakers to occur the night before a major demonstration that the cops deemed illegal. It was a clear warning not to take part.
The police claimed the timing of the arrests was a "coincidence," even though the arrests were for differing crimes alleged to have occurred at different times. The head of the Hong Kong Court Prosecutors Association sent an email to all Justice Department staff accusing the police of lying, which he says is a consistent pattern in recent months that will harm the city's justice system.
Most damning of all is an excellent story from Reuters. It outlines that the Hong Kong government drafted various ideas for ways to defuse the time bomb in Hong Kong and address the five demands made by protestors. All the solutions were forbidden by Beijing, whose representatives, surely directed by President Xi Jinping, said the Hong Kong government could never make any concessions at all.
The story was written by two of my former colleagues at Reuters, James Pomfret and Greg Torode, whom I can assure you are both excellent newshounds. It quotes three independent sources corroborating the events. It is proof that the "One Country, Two Systems" model by which Hong Kong is supposed to have a high degree of autonomy, and govern itself, is nothing more than a public relations sham.
I don't doubt their account at all. To the Global Times, however, the story is a "so-called" exclusive and the "Global Times has since learned the Reuters story is fake."
Unidentified for good reason
The Global Times, in another Opinion piece, offers no proof that any part of the Reuters story is fake, inaccurate or untrue. Instead, it merely points out that the three sources who corroborated the account are all unidentified. "It is believed the unnamed sources are fabricated, or they are fake news conspirators," the newspaper says, offering up something it "believes" as incontrovertible truth.
The sources are unidentified because, if they are in China, they might well get executed for treason. You can't criticize the Communist Party in that way or leak "state secrets," particularly to foreign reporters, something that would surely be termed espionage.
Indeed, the Global Times editorial does accuse Reuters, part of Thomson Reuters (TRI) , of carrying out actions that "US and British intelligence agencies usually do." There are suspicions, the paper insists, that the "fake story was a backdoor maneuver by intelligence agencies with Reuters acting as their accomplice."
Again, the newspaper said the Reuters report "was an attempt to interfere with Hong Kong affairs," and instead of a "so-called" exclusive is "really a malicious attempt to misrepresent the situation in HK and destroy anti-violence and peace-keeping efforts."
The editorial explicitly calls out the United States and the United Kingdom for playing the "role of firm supporter for the protestors." And the two countries are now "igniting irrational emotion and manipulating local protestors like puppets to intervene with Hong Kong affairs."
So China can meddle in Zara's choice to close its stores. It can attempt to use Western social media companies to spread misinformation and propaganda. But a bone fide news agency is somehow acting as an affiliate of the Western spy services.
I think we are nearing the point where investors holding the shares of Chinese companies will have to make a call. Are they going to continue to invest in companies supporting an increasingly authoritarian and ruthless regime?
