Three months ago, if we were to guess which American company would become Beijing’s punching bag in retaliation for Washington’s treatment of Huawei, FedEx wouldn’t be near the top of our list. The No. 1 guess would, of course, be Apple and its suppliers, which rely on dozens of factories in China.
But with Apple already looking to “diversify” its supply chain away from China because of the trade war (and, just as importantly, rising labor costs), FedEx has emerged as the top target of the regime’s ire, and not without good reason. An investigation by the Chinese government has reportedly discovered more than 100 instances where the delivery and logistics service broke Chinese laws by not successfully delivering packages addressed to Huawei, FT reports.
Over the last couple of months, FedEx has admitted to “accidentally” diverting packages addressed to Huawei to locations in the US, though the company swiftly apologized and returned the packages in each instance, suspicions that FedEx was trying to help the US government spy on Huawei would be difficult to ignore.
Beijing’s probe has also reportedly uncovered ‘other violations’ of Chinese law by FedEx, but it didn’t specify what these violations might be, according to the FT. All of this suggests that if Beijing does launch a list of “unreliable entities” – a mirror of the Commerce Department’s ‘entities list’, where Huawei was blacklisted – FedEx will be the first name on it.
The company has maintained that its failure to properly deliver the packages was due to ‘operational error’, though Xinhua reported that the investigation had determined that this was “not in line with the facts.” Chinese Foreign Ministry spokeswoman Hua Chunying said during a press conference Friday morning that the ‘operational error’ excuse wasn’t believable.
FedEx declined to comment for Xinhua, but the harassment of FedEx seems to be thematically consistent with Beijing’s retaliation against Ottawa for the arrest of Huawei CFO Meng Wanzhou. In retaliation, Chinese authorities arrested two Canadians, a former diplomat and a businessman, and have charged them with stealing state secrets, a charge that could carry a stiff sentence.
We hope any FedEx executives working in China have taken note: If they haven’t already, now might be a great time to get out of Dodge.
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