JPMorgan launches damage control after Dimon’s China prank

(Bloomberg) – JPMorgan Chase & Co. CEO Jamie Dimon knew as soon as the words came out of his mouth that the China joke could get him in trouble.

“I was just in Hong Kong, I made a joke that the Communist Party is celebrating its centenary. So does JPMorgan. And I bet we will last longer, ”he said Tuesday at an event in Boston. Then he added: “I can’t say that in China. Anyway, they are probably listening. “

Dimon, who is no stranger to cheekiness, knew the bank would have to figure out a hasty retraction. Soon, members of the company’s government relations team and the China offices met to discuss the comments and decide whether to acknowledge them or let them pass. About 18 hours later, when it became clear that the comments had attracted worldwide attention, Dimon issued a public condemnation.

“Hundreds of people, companies and organizations have apologized for hurting the feelings of the Chinese Communist Party,” said Isaac Stone Fish, founder of Strategy Risks, which specializes in corporate relations with China. The way Dimon said he regrets his comment “is a smarter way to go.”

Dimon’s remarks, made during a visit to the Boston College Chief Executives Club, come after a series of national and international trips in which the JPMorgan CEO continues to tout the United States’ economic boom, which has also brought him to the fore. front of Wall Street’s push to return to the offices. But her recent travels have been somewhat problematic: The quarantine exemption she obtained for her visit to Hong Kong, a waiver that was also granted to actress Nicole Kidman, drew much local criticism.

Now you have to downplay your comments from Boston, and it’s not the first time. Dimon has a history of provocative comments that he has been forced to retract from. In 2018, he vowed at a philanthropic event that he could beat Donald Trump in an election because he was smarter than the president, only to issue a statement hours later saying he shouldn’t have said so.

Dimon’s boast and apology reminded another Wall Street CEO, whose firm is a large JPMorgan shareholder, Lloyd Blankfei’s joke years ago that Goldman Sachs Group Inc. was doing “God’s work.” Attempts by bank bosses to be resourceful take on a life of their own, said the executive, who requested anonymity so as not to link his name to a mess. Dimon is likely to overcome the consequences as well, as is Blankfein, but the distraction will not be welcome, the executive said.

The mea culpa underscores JPMorgan’s desire for cordial relations in China, where it has an exposure of nearly $ 20 billion and has ambitions to expand further. Earlier this year, the bank obtained approval from Chinese regulators to own its securities company in China and wants to maintain its good position in the country for other license applications, especially ahead of major leadership changes in the market. match expected next year.

Careful balancing

And while Dimon’s comments have been met, so far at least, with the silence of Chinese government officials, the country has a history of cracking down on companies and individuals who appear to challenge its policies, especially on sensitive issues such as the legitimacy of the Communist Party or Taiwan. UBS Group AG was pressured to fire its chief economist in 2019, Paul Donovan, after he commented on a “Chinese pig” in a note on rising consumer prices. He later apologized, saying it was “innocently intentional.”

Dimon’s retraction also highlights the path companies have to tread carefully when dealing with a government sensitive to perceived slights in a country where potential profits are high. In 2019, after the Houston Rockets general manager tweeted a message of support for Hong Kong protesters, National Basketball Association Commissioner Adam Silver came under fire for trying to appease both parties in his initial response. .

Last year, when faced with a harsh backlash for referring to Hong Kong and Taiwan as countries, fashion brands Coach and Versace quickly issued apologies to reassure consumers and correct their websites to show respect for “the sentiments of the Chinese people ”and“ national sovereignty ”.

Opportunities in China

Still, Dimon has enjoyed a lot of sympathy in China, which he has long looked to for its enormous opportunities. You are also aware of the risks. In his 66-page annual letter to shareholders this year, Dimon devoted more than a page to the country, writing that in the past 40 years, China has “done a very effective job” with economic development. But he warned that in the next 40 years, the country will have to face serious problems such as lack of resources, corruption and income inequality.

Dimon did not call the CCP by name, but noted that only 100 million people in China “effectively participate” in the country’s one-party political system, a level of participation lower than in any other developed nation.

“China’s recent success makes its leaders feel secure,” Dimon wrote in April. “The growing middle classes almost always demand political power, which helps explain why autocratic leadership almost always falters in a larger and more complex economy.”

His comments also come at a time when the US and China continue to grapple with protracted clashes over issues such as market access, data security and international stock prices. Wall Street has also tried to improve relations with the country in an attempt to access its $ 54 trillion financial system.

Whether Dimon’s comments trigger any retaliation from China remains to be seen, Stone Fish said, though he suspects this is where the debacle may end.

“Companies and people are realizing that what happens in China or in the China space does not stay in China,” he said. “It has real world implications for them and their business in the US.”

Original Note:

JPMorgan Started Damage Control as Soon as Dimon Made China Joke

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