China, From Within: A Wrinkle in Tesla’s China Strategy, and the Law Versus the Party

Every day, FP‘s China team at the Tea Leaf Nation channel scours dozens of Chinese media outlets to find compelling stories unreported in Western mainstream press. This week, we bring you a wrinkle in Tesla’s China strategy, the struggles of Chinese Uber lookalikes, shadowy copyright violations, the law versus the party, and more.

Chinese media claims Tesla has called off direct sale event on Alibaba’s Tmall.  

Independent business weekly Economic Observer reported on Oct. 30 that Tesla has cancelled its participation in a Nov. 11 mega-sales event on Alibaba’s Tmall, China’s largest e-commerce site, according to an unnamed source in Tesla’s China headquarters. Tesla’s China operation announced the electronic car maker’s participation on Oct. 20. But the planned direct sale event has since then drawn ire from U.S. headquarters, according to the Economic Observer report, because the cars sold on Tmall would be available for delivery immediately, whereas buyers through other channels, including the official website, need to wait approximately four to six months.

Automobile industry consultant Zhang Xingao told Economic Observer that the cancelation "reveals poor communication between Tesla’s China operation and U.S. headquarters, and the difficulties in expanding in the Chinese market," at the same time facing difficulty in maintaining the "image of a ‘high-value brand’ while increasing sales through unconventional channels." Zhang concluded, "It seems like Tesla China has yet to formulate a good strategy."

China’s Uber lookalikes are having legal problems, too. 

Didi Dache, a popular taxi app introduced a "black car" service that allow users to book high-end cars at three or four times the fare of a normal taxi ride. But according to an Oct. 30 article in Communist party mouthpiece People’s Daily, the transportation bureau in the large northern city of Shenyang has now declared this service illegal. The original Uber app has faced a host of legal issues in recent months, from safety and liability concerns to taxi regulation. Chinese media giant Tencent backed Chinese Uber copycat Didi Dache with a $100 million investment in January.

TV and film copyright violations still exist in dark corners of China’s Internet. 

While major video sites in China have largely stamped out videos that violate copyrights, such practices are still rampant among users determined to find the free stuff, according to an Oct. 28 report by popular tech blog TMTPost. In addition to succumbing to the pressures to "clean up" as public companies, major video sites like Sohu and iQiyi also have an incentive to train users to pay membership fees for content, since many have introduced original series. However, "seeds" for illegal materials, often the latest movies or TV series that have yet to appear on major sites, still exist on smaller sites, social media groups, and cloud sharing channels, particularly among students on college campuses. 

Don’t ask this question: "Which is greater, the law or the party?" 

Communist Party mouthpiece People’s Daily deemed that question, which implies doubt about the effectiveness of the party’s plan to strengthen "rule of law," a "hollow thesis." The Oct. 29 editorial, seeking to correct "certain views available on the market," declared that to "place the party’s leadership and the rule of law in antagonizing positions against each other is incorrect," because "party policy is the spirit and foundation of the law."

Discussion of the Fourth Plenum, a key party planning session that ended on Oct. 23, and its espousal of the rule of law have been highly censored on Chinese social media, but this editorial, which started as a People’s Daily post on the microblogging platform Weibo before appearing in full editorial form, became perhaps inadvertently a space for discussion of this very question — which is greater, the law or the party? One comment, reposted a number of times, read, "Even if you can guarantee that the interests of the abstract concept of ‘party’ and the interests of the people are in line with one another, you cannot guarantee that an individual party secretary and the people share the same interest. Is a common person allowed to sue a party secretary?"

State-owned media continue to build up Xi Jinping’s personality cult. 

In contrast to his predecessor Hu Jintao, who seemed to prefer blander media engagement, Chinese President Xi Jinping has demonstrated a penchant for using state media to set himself up as an exemplary Communist. The most recent example, an Oct. 30 article in People’s Daily dug up stories from 25 years ago, when Xi was the party secretary of a small town in Fujian province, to demonstrate that Xi was "one with the masses" and implemented "innovative" and "effective" policies. According to the article, Xi walked under "searing sun" on "mountainous roads" for more than two hours while "wearing a straw hat on his head and a towel on his shoulders" in order to visit a very remote village. And Xi reportedly only hosted one banquet table when he married Peng Liyuan in 1987, meaning that his wedding wasn’t showy or expensive.

Alibaba in the countryside: What do rural e-commerce customers want?

According to a survey released on Oct. 30 by Maimaibao, an e-commerce site that targets rural areas, rural e-commerce customers spent $100 a month on e-commerce on average, which is comparable to the amount spent by urban users. Students, migrant workers, homemakers, and small business owners are the top shoppers — and for rural residents, shopping is the foremost goal of Internet use, rather than social networking. Most are suspicious of Internet payment and choose to pay when the goods arrive; most use cheap smartphones to browse the Internet and shop online; and most prefer heavily advertised domestic brands over high-end international brands.

Party watchdogs have added a new target to their list: "turf protectionism." 

China’s Central Inspection Team, an organization charged with keeping government officials in line, announced yesterday that they will now be going after local officials in Shanghai, Hebei, and Jiangsu who engage in "turf protectionism." The term refers to officials who view their districts as "private territory," and the lower-ranking officials under them as "vassals." It’s hardly a new phenomenon — the term has been around since at least the Mao era — but according to an Oct. 31 report in the state-run China Youth Daily, this is the first time officials in Xi’s ongoing anti-corruption campaign have formally mentioned the practice as a new target for government bad-behavior sweeps.