Chinese regulations require all businesses to retain all digital records of data they collect from customers in China. In fact, Tesla cannot even perform software updates to vehicles in China without government approval. Musk, who is notoriously anti-Big Brother in his adopted homeland of the United States, not only accepted the requirement but praised it.
On one level, it may seem like a small price to pay. Chinese President Xi Jinping made significant regulatory concessions to encourage Musk to bet much of the company’s future on its relationship with China by way of massive tax breaks, access to below-market, low-interest loans, and, of course, access to all that cheap labor in a country with relatively lax environmental rules. However, there’s already evidence that it may have been a devil’s bargain.
China’s main interest in Tesla is to help create a domestic supply chain for the growing electric vehicle market. Tesla, the preeminent player in the EV sector, will surely create a domestic market and supply chain. However, domestic companies will benefit once that has been established, especially once the Chinese government grants them favouritism in the markets, as is typical.
Musk has also demonstrated an alarming amount of fealty to Xi and the political agenda of the Chinese Communist Party. The native South African and U.S. citizen is, hands down, the most visible CEO in the world, with a cult following of tech fans that rivals even the late Apple founder Steve Jobs. But while his Tweets about American policy and leadership tend to be rather combative and libertarian, Musk routinely showers Xi and China’s business practices with praise, demonstrating an almost robotic fealty.
In perhaps his biggest knee-bend to date, Musk even agreed to open a showroom in the country’s Xinjiang Province, where China is holding about a million of its Uyghur Muslims in concentration camps. An unlikely market for an early showroom, to say the least, the move was clearly a tacit endorsement of China’s right to do so.
