BEIJING -- Elon Musk's ties to China through his role as electric car brand Tesla's biggest shareholder could add complexity to his bid to buy Twitter.
Other companies that want access to China give in to pressure to follow Beijing's positions on Taiwan and other issues. But Twitter is shut out by internet barriers that block most Chinese users from seeing global social media, which gives Beijing no leverage over the company, though the ruling Communist Party uses it to spread propaganda abroad.
Tesla Inc.鈥檚 ambitions in China might give Beijing that leverage to pressure Twitter to silence human rights activists and other critics or ease its rules on propaganda if Musk鈥檚 US$44 billion purchase goes ahead, some experts suggest. Chinese customers bought half the Teslas sold last year. Its busiest factory and 鈥渕ain export hub鈥� is in Shanghai.
鈥淭he Chinese exert tremendous leverage over businesses,鈥� said Anne Stevenson-Yang of J Capital Research. 鈥淚f you care about the Shanghai operation (of Tesla), then you鈥檙e going to put everything else in service to that.鈥�
Musk says he sees 鈥渘o indications鈥� Beijing might use Tesla as leverage, but other companies don鈥檛 wait for government orders. Automakers, clothing brands and others take pre-emptive action to protect their access to China by changing marketing or products sold worldwide to reflect official positions such as the ruling party鈥檚 claim that self-ruled Taiwan is part of its territory.
Musk said Friday his offer was suspended while he tried to confirm whether the number of Twitter accounts without real users behind them was below 5% of the total, as the company says.
On Monday, he said at a business conference in Miami that a deal at a lower price wasn't 鈥渙ut of the question,鈥� Bloomberg News reported. That supported suggestions by industry analysts that Musk wants out of the deal or a lower price due to a fall in the value of Tesla stock, some of which he has pledged to finance the purchase.
Trying to use an investor鈥檚 stake in one company to pressure a different company outside China would be a new tactic. But foreign investors know the ruling party is increasingly assertive about defending its 鈥渃ore interests鈥� worldwide and attacks global brands even when that imposes costs on China and its public.
Officials have warned companies must 鈥渞espect the feelings of the Chinese people鈥� and avoid 鈥渆ating Chinese rice while smashing Chinese bowls.鈥�
A handful have given up opportunities in China to avoid cooperating with official censorship or surveillance or suffering a consumer backlash abroad over human rights or other issues. More common are companies such as hotel operator Marriott, which in 2018 fired an employee who 鈥渓iked鈥� a Twitter post praising a customer survey outside China that called Tibet a country.
Regulators can pressure automakers by blocking them from expanding output while ordering them to stay silent about the reason. More openly, state media have called for boycotts of Japanese, South Korean and other brands during disputes with their governments.
Tesla's sales in China rose 226% last year to 473,600 vehicles, according to LMC Automotive. That was about half of its 935,222 global deliveries.
Musk, who is Tesla鈥檚 chairman, was asked about the possibility the automaker might be used by Beijing as leverage over Twitter while appearing virtually at a May 11 event hosted by The Financial Times newspaper on the auto industry鈥檚 future.
鈥淚鈥檝e seen no indications to that effect,鈥� Musk replied.
Musk said he expects China to be 25% to 30% of Tesla鈥檚 market in the long term.
The South African-born billionaire said he doesn鈥檛 see another Tesla factory in China in the near term but the company will expand in Shanghai.
The company, headquartered in Austin, Texas, didn鈥檛 respond to questions by email about its expansion plans.
Human rights activists criticized Tesla after it opened a showroom in Xinjiang in the northwest last year despite complaints of abuses against ethnic Muslim groups living there. The company isn't alone: Volkswagen AG operates a factory in the region and Chinese partners of other global brands have sales outlets there.
Musk says he wants to make Twitter a 鈥減olitically neutral鈥� forum for as much free speech as each country鈥檚 laws allow.
He hasn't said what he might do about Twitter's requirement that accounts of China鈥檚 state media and officials must be labelled 鈥渟tate-affiliated.鈥� Scrapping that or curbs on inflammatory speech might make it easier for Beijing or other governments to influence American public opinion during elections.
A reporter for the official China Daily newspaper wants the tag dropped.
鈥淓lon Musk should remove my label,鈥� Chen Weihua wrote on Twitter on April 30. 鈥淭his is totally discriminatory and suppression of free speech.鈥�
Some companies fail to find a compromise between Chinese pressure and public outrage abroad over accusations of forced labour in Xinjiang and other abuses.
Last year, state media called for a boycott of Swedish clothing retailer H&M and other brands that stopped using cotton from Xinjiang. Most stuck to their position despite a hit to sales, possibly fearing bigger losses from a consumer backlash abroad.
Some companies don鈥檛 want to be seen to 鈥渃arry the water for the government,鈥� said Lester Ross, head of the Beijing office of Washington law firm WilmerHale.
China has the biggest population of internet users at just over 1 billion, according to official data. But most cannot see Twitter, other social media abroad and thousands of websites run by news outlets, human rights or pro-democracy activists and others.
China has its own popular but heavily censored social media. They are required to delete material deemed subversive or pornographic.
Sina Weibo, a Twitter-like microblog service, says it has 573 million active monthly users, or more than double Twitter's 229 million. Tencent's WeChat message service says 1.2 billion people use it every day.
Censorship has tightened steadily since President Xi Jinping took power in 2012.
Accounts run by support groups for young gays and lesbians have been closed. Complaints about food shortages when Shanghai was shut down to fight virus outbreaks were deleted.
In 2018, Tesla became the first foreign automaker to set up its own factory in China after ownership restrictions in the industry were scrapped. Until then, global automakers had to work through state-owned partners that assembled their vehicles.
Tesla鈥檚 honeymoon included access to subsidies for buyers of electrics and an exemption from sales tax. But when subsidies were extended in 2020 to help the industry through the pandemic, Tesla was excluded, while its closest Chinese rival, luxury electric brand NIO, remained eligible.
Musk is known for flamboyant gestures that include smoking marijuana during a radio interview. But he is alert to Chinese sensitivities.
He complained anti-virus measures in California disrupted Tesla production but said nothing in public after the shutdown of Shanghai forced his company's factory to close.
