How the Nine-dash Line Hurts China’s Economic Interests in Vietnam | Fulcrum

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China’s controversial nine-dash line claim in the South China Sea poses problems for Chinese companies operating in Vietnam.

China’s nine-dash line claim in the South China Sea recently caused an uproar in Vietnam. Vietnamese authorities earlier this week banned the release of the Warner Bros. movie “Barbie” after it contained an illustration purportedly depicting a nine-dash line. It was later revealed that Chinese company IME Entertainment, which is organizing a concert by K-pop band Blackpink in Hanoi later this month, had posted a map showing the nine-dash line on its website. As a result, many Vietnamese netizens are calling for a boycott of the show, although Vietnamese authorities are currently investigating the issue. Following the backlash, IME Entertainment quickly shut down its website and its CEO apologized to the Vietnamese public.

This is not the first time the nine-dash line, also known as Vietnam’s “cow’s tongue line,” has caused problems for companies, including Chinese ones, nor will it be the last. Since 2019, Vietnam has banned films containing the line, including “Abominable,” “Uncharted,” and “Pine Gap.” Additionally, maps, globes, books and mobile games containing such images are prohibited in the country. In 2020, the Vietnamese government issued a decree allowing the confiscation of publications containing the nine-dash line and fines to publishers.

The nine-dash line, which has been drawn on Chinese passport pages since 2012, is also an obstacle for Chinese companies to invest in Vietnam. For example, Vietnamese authorities have refused to accept Chinese passport holders as legal representatives of Vietnamese companies, leading to delays in company incorporation applications. Legal representatives typically play an important role in dealing with local authorities and signing important company documents, so it is undesirable to use an agent in that position.

Since late 2019, Hanoi authorities have reportedly refused to apply for work permits and police permits by Chinese nationals with passports bearing a nine-dash line map. Furthermore, after it was discovered that a domestic automobile importer was selling a Chinese-made car with a nine-dash line in the navigation system, the Ministry of Industry and Trade ordered the Vietnamese importer to sell a product with a similar map. requested to refuse.

In 2016, the International Court of Arbitration ruled that China’s nine-dash line claim in the South China Sea had no basis in international law. Therefore, Vietnam’s above actions can be regarded as measures to protect its legitimate maritime rights and interests and to enforce the judgment.

More importantly, China’s repeated aggressive actions to enforce its nine-dash line claim have sparked anti-Chinese sentiment within Vietnam. In 2014, for example, China installed a large oil rig in Vietnam’s exclusive economic zone. Violent confrontation between the two countries continued, with multiple anti-China riots targeting Chinese factories across Vietnam. As a result, a factory believed to be owned by a Chinese was severely damaged.

These examples show how China’s hardline stance and nine-dash line claims in the South China Sea are having a negative impact on Chinese companies in overseas markets. As a result, Chinese investors have become more cautious about investing in Vietnam, which may partly explain the relatively low level of Chinese investment in the country. By March 2023, despite the close proximity of the two countries and the increasing attractiveness of Vietnam to foreign investors, China will only rank sixth among foreign direct investors in Vietnam in terms of cumulative registered capital, and projects The number came to 3,651, worth $23.85 billion. South Korea, which has no territorial or maritime disputes with Vietnam, ranked first with $81.5 billion in investment.

In 2016, the International Court of Arbitration ruled that China’s nine-dash line claim in the South China Sea had no basis in international law. Therefore, Vietnam’s above actions can be regarded as measures to protect its legitimate maritime rights and interests and to enforce the judgment. As a result, companies operating in Vietnam may suffer losses due to product bans if they do not follow Vietnamese policies. This poses a dilemma for international companies. Because many companies have far greater business interests in China, including the nine-dash line in related products will lead to pressure to comply with Chinese policy.

Some companies have so far accepted sacrificing their profits in Vietnam to satisfy the Chinese government and protect commercial concerns in the Chinese market. But given the 2016 ruling, increased strategic competition between the United States and China, and heightened tensions in the South China Sea, other countries have introduced similar restrictions on products featuring the nine-dash line. The possibility of doing so is not entirely inconceivable. Future line image.

Now the Philippines is reportedly considering a similar Barbie movie ban, while U.S. politicians such as Republican Senator Ted Cruz say Warner Bros. accusing them of being complicit in the spread of what they call If the US and its allies seek to enforce a 2016 ruling to counter China’s illegitimate claims in the South China Sea, companies that choose to follow Chinese pressure will suffer huge losses in markets outside China. Probability is high.

The dispute over China’s nine-dash line claim in the South China Sea has highlighted geopolitical tensions that could pose challenges for international business. While the economic impact of this issue may be minimal at this time, businesses should be mindful of the potential risks posed by this issue in the future. Therefore, we should try to overcome the tension and deal with the nine-dash line issue in a more prudent manner, such as removing the nine-dash line from products sold in markets outside China. After all, upholding illegal claims can lead to serious financial losses and irreparable reputational damage in the long run.

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