Silver Lining: NBA Bounces Back in China

An increasingly authoritarian regime poses risks to the values of any U.S. company doing business there. Some thoughts on how to handle.

When it comes to risk, CEOs have plenty to worry about: Cyber, #MeToo, digital disruption. Not to mention growing a business during a time of stunning uncertainty.

Here’s another to put on your radar in 2020: relations with China. In the years to come, corporate chieftains doing business there will be challenged in new ways as an increasingly authoritarian regime flexes its muscles internationally. From trade and human rights to politics and social media, CEOs will struggle as never before to balance the desire for market access without compromising their values. It won’t be easy—just ask Google, Apple, Facebook, et al.

That’s why it’s worth taking a look at how the National Basketball Association, and its able commissioner, Adam Silver, handled its recent run-in with the country.

For those who missed it, on the eve of a game between the Los Angeles Lakers and Brooklyn Nets in Shanghai, Daryl Morey, GM of the Houston Rockets, tweeted in support of Hong Kong’s pro-democracy demonstrators, precipitating a crisis for the NBA, which has 500,000 fans in—and billions of dollars of revenue—China earns.

The resulting firestorm was swift. Beijing immediately condemned the comments, as did Yao Ming, chairman of the Chinese Basketball Association (who, ironically, used to play for Houston). Then, Rockets owner Tilman Fertitta—clearly terrified of a potential economic hit for his club—reprimanded Morey on Twitter. LeBron James, with millions in personal merchandise sales at stake, piled on as well. “I believe he wasn’t educated on the situation at hand, and he spoke,” James said, referring to Morey. “So many people could have been harmed, not only financially, but physically, emotionally, spiritually.”

Morey deleted his tweet and apologized. This cave-in to the Chinese by an American institution sparked outrage among U.S. fans—and from politicians on both sides of the aisle, from President Trump and Texas Sen. Ted Cruz to former Congressman Beto O’Rourke and Congressman Julián Castro.

Silver, who was flying from Mumbai to Tokyo without WiFi when the drama unfolded, soon found himself trapped between the two most powerful nations on earth. American politicians pressured him to suspend business with China. Chinese state-run television threatened retribution. The three things Silver did next are as good a playbook as any for this kind of situation:

First, defuse immediate tension—The next day in Shanghai, Silver had private conversations with key people and avoided engaging in public grandstanding. He ensured the game between the Lakers and Nets took place.

Then, fortify your values—Refusing to discipline Morey, Silver fortified the NBA’s position as an American institution with respect for freedom of speech. After all, it is U.S. principles—at least in part—that make the NBA so appealing to Chinese fans.

Finally, find strategic common ground—Last, Silver quietly reminded partners that the $4 billion of Chinese NBA commerce benefits Chinese enterprises such as Tencent and CCTV as well as the NBA. Smart leaders will remember their Kipling:

East is East, and West is West, and never the twain shall meet,
Till Earth and Sky stand presently at God’s great Judgment Seat;
But there is neither East nor West, Border, nor Breed, nor Birth,
When two strong men stand face to face, tho’ they come from the ends of the earth!

Only a human-level exchange can break down cultural and ideological barriers—and create real respect.