In this episode of our BryghtCast edition of the Managing Uncertainty Podcast for the week of October 7th, 2019, Bryghtpath Principal & CEO Bryan Strawser and Consultant Bray Wheeler take a look at current risks and upcoming events:
Bryan Strawser: Hello. Welcome to the Managing Uncertainty Podcast. This is our BryghtCast edition for the week of October 7th, 2019. I’m Bryan Strawser, Principal and CEO here at Bryghtpath.
Bray Wheeler: This is Bray Wheeler. I’m a consultant here at Bryghtpath.
Bryan Strawser: As everyone knows during this edition we take a look at some hot topics and things that are going on or that we think are going to happen around the world and talk about their impact on the business and nonprofit community. I think we’re going to start today with some discussion about the European Union and the United Kingdom. Bray?
Bray Wheeler: Everybody’s favorite topic, Brexit. The reason we’re mentioning this week and to kind of be brief, but some developments that have happened here at the beginning of this week the United Kingdom is kind of active in discussions with the EU and some of those partners to try and negotiate their way out of Brexit. They’re hoping that the EU will give some kind of latitude or make some concessions in the debate, and the EU is holding pretty firm.
Bray Wheeler: The notable event that happened this week was a call between German chancellor, Angela Merkel, and prime minister Boris Johnson of the UK. They had a pretty frank discussion by all accounts. Boris was trying to lay out his plans. Chancellor Merkel was having-
Bryan Strawser: None of it.
Bray Wheeler: … none of it. They really didn’t end up with any kind of an agreement between the two of them. To kind of pile onto that the European Council President, Donald Tusk, also today, we’re recording this on Tuesday, mentioned… had some pretty stark words for Mr. Johnson over what the UK is planning to do. His quote in I believe his tweet was, “What’s at stake isn’t winning some stupid blame game, at stake is the future of Europe and the UK as well as the security and interests of our people.” You don’t want a deal. You don’t want an extension. You don’t want to revoke.
Bryan Strawser: They’re just going to leave.
Bray Wheeler: Yeah.
Bryan Strawser: Right?
Bray Wheeler: Essentially my impression is Boris is putting on a show. Prime Minister Johnson is putting on a show with no real intent to reach a deal. The U just isn’t going to play the game, and they’re going to let kind of UK internal politics play themselves out, and they’re going to leave without a deal.
Bryan Strawser: There are three weeks to go, right?
Bray Wheeler: Yep.
Bryan Strawser: I think at this point this is what the prime minister wants. I think he wants to leave without a deal. The deal was they’re going to leave. That’s the deal.
Bray Wheeler: Right.
Bryan Strawser: I think it was over the weekend he essentially told the press… I don’t think this was in parliament. I think he told the press discussion that he was basically daring the queen to remove him, that he wasn’t going to resign. He wasn’t going to give up the fight. If the queen wanted to, she could just remove him, which that hasn’t happened in over 200 years I believe. I don’t see that happening-
Bray Wheeler: No.
Bryan Strawser: … in their current constitutional structure.
Bray Wheeler: Not based on the nature of this topic. I think if this was some kind of extreme personal kind of moral-ethical dilemma, he’s committed serious crimes or something like that, she may get involved, but the queen’s been pretty hands-off and pretty kind of ceremonious with her role in a lot of this stuff and kind of letting the politics play politics.
Bryan Strawser: It’s going to leave a lot of things unsettled on the table around borders and immigration and trade and travel and a lot of stuff. Even in my own personal case, I’m a grad student at a school in London, distance learning student, but I do have to go over there for some things in the coming years. When we had our call a few weeks ago for new students with their staff about visas and immigration and stuff, almost every question about short-term study visas, which as a US citizen I can just show up with some documentation and be given that on the spot as long as I’m leaving within six months.
Bryan Strawser: But for students coming from other countries that are in my program that’s not true. They have to have a visa before they can travel. The answer to almost every question was we don’t know, and we probably won’t know until after this happens. So it’s very unsettling. And that’s just students. That’s not even trade.
Bray Wheeler: Didn’t you mention that they were even saying it for you too that you asked-
Bryan Strawser: Well, yeah, I did.
Bray Wheeler: You could’ve asked the question as a US citizen, and they were like, “Yeah, we don’t know either.”
Bryan Strawser: Yeah, I did. I don’t think they anticipated anything is going to be any different. We have our own… The United States and the UK have their own immigration agreement about visas and visa-free travel as the United States does with the EU and individually with EU countries. But, yes, it’s kind of… I will need to go there I think in January for some things. I think that the current state is true. I can just show up with the documentation that’s required. But, yeah, I’ll have to figure all this out. None of us are going to know anything until November.
Bray Wheeler: Yep. I mean, that’s really why we’re mentioning it today is just kind of conversation, kind of formal… Some of these more formal talks between the UK and Europe are starting to happen, and they’re not going well. By all accounts as an organization, really start kind of thinking through what your plans are. Travel doesn’t sound like there’s going to be any disruption kind of before then, but you’ll need to be prepared for potentially some really significant changes or there may not be any changes.
Bray Wheeler: Over the next three weeks it’s going to be a topic to definitely watch, and I’m sure we’re going to talk more about it.
Bryan Strawser: Undoubtedly.
Bray Wheeler: Moving on to our next topic it’s really the withdrawal of US troops from Syria. This one will be pretty quick because there’s not much kind of unfurled with this yet. Really why we’re mentioning this is twofold. The US is pulling out their troops and essentially kind of told Turkey to handle the situation. That’s caused some real kind of, to use a big word, consternation with the Syrian Kurds who have been long-time US allies in this area of the world. We’re kind of leaving them on their own, and they don’t get along with Turkey.
Bray Wheeler: Turkey historically has not treated some of its minority populations all that well. So there’s real concern kind of both within the US, in Europe, with the Kurdish population in the Middle East around what this withdrawal will mean for them. There’s also kind of insinuations from the Kurds that says, “Hey, you know all the help that we’ve given you with ISIS and some of these terror organizations in the region? Yeah, we might be done because we’re going to have to go handle our business and protect ourselves.”
Bray Wheeler: Kind of looking at this in a longer-term potential of this situation, this withdrawal really kind of invokes a lot of different things. Turkey is probably prime for some situations that aren’t going to go over well, which if you have businesses or operations in Turkey that’s definitely a real thing in terms of terrorist threats, operational disruptions, different internal politics that will happen within Turkey around this situation, but also the terror threat kind of at large globally could be reopening wide up especially if the Kurds aren’t able to continue to put the pressure that they’ve been able to put on ISIS and some of those other fractions.
Bray Wheeler: So not a whole lot, but there are definitely some significant repercussions. This is kind of agnostic of political party in the US right now in terms of our withdrawal kind of from the Syria conflict. Republicans are upset. Democrats are upset.
Bryan Strawser: I mean the feedback to the President yesterday when this was announced, which was announced late in the evening the night before, I mean the feedback has been universally negative. Now, I have been entertained by I would say some Trump activists’ comments about unnecessary endless war and some of that kind of stuff. I expected that. A lot of the folks, this is one of the reasons that they backed the president in the 2016 elections is he said he was going to get us out of these foreign entanglements and some of this.
Bryan Strawser: At the same time, I feel like the country owes a debt of honor to the Kurds for the role that they played in combating ISIS and others. They took terrific casualties, a horrendous number of casualties in doing so. This is I think a really bad spot for the country to be in. To your point, I think the broader security issue is what does this raise in terms of terrorism and the impact on that. Does this give ISIS a potential new stronghold to reinvigorate themselves? I guess we’ll find out.
Bray Wheeler: There are also advantages to Russia, to Iran to other players. It feeds into the broader kind of… It’s one more kind of swirl within the chaos that’s going on in the Middle East right now with all the different topics. Not that it’s ever clean cut region to discuss, but it’s definitely a step that gives some advantages to some other players that are causing disruptions on other issues and other things.
Bray Wheeler: Moving right along to another one of our favorite topics, Hong Kong, so a couple of developments. We’re going to tie into kind of more broad China and kind of corporate aspects of that, but we’ll just start out with Hong Kong right now. Kind of some of the developments that have come out of there, Carrie Lam, their chief executive has essentially kind of indicated that if this situation doesn’t get under control soon, China will probably have to intercede in what’s going on there. China has for the most part been formally out of kind of security control in there, but this is the first time that Carrie Lam has ever kind of insinuated that China might get directly involved in security operations.
Bray Wheeler: The statement kind of comes on the heels of her using her executive power to ban mass and some other security things. Over the weekend they had shut down the subways, they had shut down shops, shopping malls, and things like that, so there was kind of a lot of executive control exercises over the last few days, some of which again kind of like the violence that we saw last time with direct kind of ballistic action with security forces. Now they’re saying China might be involved. That’s another kind of step in the escalation of what’s going on there that that’s the first insinuation that, hey, if you guys don’t stop, China might actually take control.
Bray Wheeler: Which kind of ties into the other component of Hong Kong that kind of broke over the weekend that’s probably much more interesting now to corporations and their interactions with China was the Houston Rockets national basketball association team-
Bryan Strawser: So their GM, right? The general manager.
Bray Wheeler: The GM put out a tweet that essentially said stand by. Let’s see, I have the quote here somewhere. Fight for freedom. Stand with Hong Kong. That did not go over well in China.
Bryan Strawser: Yes.
Bray Wheeler: China is a huge market for the NBA. China has since said, “Hey, we’re not going to show any preseason games. We’re going to cancel some other stuff. We’re kind of reevaluating our whole partnership with you.” The GM kind of summarily deleted his tweets didn’t really say too much more. Commissioner Adam Silver came out and said, “Hey, we can’t value dollars over our kind of moral and ethics around some of this stuff, but we’re still not going to talk about Hong Kong anymore.”
Bray Wheeler: So kind of in the same breath as I’ve directed everybody not to talk about Hong Kong to bring it up as a subject, but at the same time we stand for something that’s counter to that kind of narrative. There’s kind of this contrast there, kind of an addition to that Blizzard the video game interactive company-
Bryan Strawser: Manufacturer of World of Warcraft.
Bray Wheeler: Manufacturer of World of Warcraft.
Bryan Strawser: A division of Activision.
Bray Wheeler: Also removed a player from a tournament that was part of what they were sponsoring or one of their tournaments. They removed him for comments that he made in support of Hong Kong. So there’s a lot of companies facing a lot of different criticism from China right now that they are kind of actively saying, yeah, we’re choosing our business over democracy. That’s the message that’s playing out. That’s not necessarily our stance on it.
Bryan Strawser: Right.
Bray Wheeler: But that’s the conversation that’s coming out that these companies are facing reputational kind of crunches against them for these stances or for people within their organization making pro-Hong Kong stances.
Bryan Strawser: I recall that we talked about this a few weeks ago on a previous edition of the podcast where we were talking about Marriott Hotels and was it the Gap?
Bray Wheeler: Yep.
Bryan Strawser: Someone else, another fashion company, had kind of stepped in it because they had T-shirts, and they listed Macau and Hong Kong and Taiwan as separate entities. Marriott’s issue is that in their country dropdown they didn’t put-
Bray Wheeler: China behind it?
Bryan Strawser: China as the … You’d go to China and you’d see the various Chinese cities, and they didn’t have Macau and Hong Kong and Taiwan listed on there. They had them listed as separate sovereign countries or sovereign cities like Singapore. This is interesting because this is China flexing its economic muscle. I mean, the NBA thing got the NBA’s attention really quickly because China has a deal… The NBA has a contract with the state-run media in China that opens up the market of about 500 million people to watch the NBA and professional basketball being one of the top sports for TV watching in China.
Bryan Strawser: The NBA is experimenting with global expansion. They’re playing games in India. This season they played a game… Did they play a game in China? I think they did.
Bray Wheeler: Yep.
Bryan Strawser: I think they were looking at some other countries.
Bray Wheeler: Mexico.
Bryan Strawser: In Mexico. Baseball has done London and Mexico and Japan. I think we’re going to continue to see this. Eventually, I would expect we may have some true global leagues here. I mean the NBA is already running leagues in other parts of the country, but I expect that we might see true globalization of some of the professional sports leagues, which would be cool. But China is going to have their own take on this that is going to make this very difficult. This was purely China flexing economic power, enforcing the NBA to make a change, and then the NBA they whiplashed. I’m surprised they didn’t get hurt in how radically they got yanked in two different directions because first, they followed China’s wish, and then they reversed, mostly reversed themselves, because they got so much pressure from the US market from their current largest market.
Bryan Strawser: They’re in a weird spot. From a pure business perspective, leave the politics, they’re in a very difficult situation because their future largest market ever is on the line with this. But they’re alienating. They could also alienate their current largest market. What a difficult place to be in let alone of the politics of what’s the right thing to do here.
Bray Wheeler: Right.
Bryan Strawser: As I think many people reminded them, they are our company based in the United States who started in the United States.
Bray Wheeler: Today the New York Times had an article for companies in China political hazards are getting harder to see. The first line I think is very, very apropos for kind of what you just described to and you probably should’ve led with it, but the quote is, “For international companies looking to do business in China, the rules were once simple. Don’t talk about the three T’s, Tibet, Taiwan, and Tiananmen Square crackdown.”
Bryan Strawser: Ouch.
Bray Wheeler: “No longer fast-changing geopolitical tensions, growing nationalisms, and rise of social media in China have made it increasingly difficult for multinationals to navigate commerce in the communist country.”
Bryan Strawser: Yowza.
Bray Wheeler: That’s pretty much what we’ve seen kind of play out especially with Hong Kong on the heels of trade wars and other things like that. China means a little bit of business right now.
Bryan Strawser: It’s a huge economy to participate in. I don’t know if we have advice here on how to make the right decision. Certainly, organizations should be thinking about this. If you work in China, you operate in China, you desire to operate in China, know that strings come with the deal. You’ll have to find a way to balance the competing interests here around that. We always argue that you should do the right thing whatever the right thing is. I think in this case when it comes to democracy on the line, the answer is pretty clear, but you got to make your own decisions.
Bray Wheeler: Right.
Bryan Strawser: That’s it for this edition of The Managing Uncertainty Podcast. We’ll be back next week on Monday with a new edition of the podcast. Hope to hear from you then. Thanks
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