The chief economist of UBS has provoked outrage in China with a wayward comment. UBS is facing calls for his sacking.
UBS and its chief economist in the wealth management division, Paul Donovan, are in serious trouble. The Chinese public and the local finance community is up in arms following a comment by Donovan about pigs, as reported in the media on Thursday.
The Chinese Securities Association in Hong Kong, which represents the financial services industry in mainland China and Hong Kong, is not satisfied with the apologies issued by the bank and Donovan, according to reports carried by news agencies.
Violation of Feelings
The organization wants the board of UBS to publish a formal apology, according to the reports. Also, it demanded that the bank should sack Donovan and all other people involved in the matter at the bank. The association said that the statement by UBS was arrogant in tone and violated the feelings of Chinese citizens.
Donovan had commented on rising consumer prices in a UBS Morning Audio Comment and made a joking reference to the influence of swine fever on pork prices. Donovan had said: «Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China.»
Words of Remorse
Donovan’s wayward comment sparked a veritable «shitstorm» with allegations that his words were essentially racist. The state-owned newspaper «Global Times» weighed in and castigated the bank for the use of racist and distasteful language.
Reacting to this furor, Donovan appeared in an interview on «Bloomberg» and apologized for his mistake and for using culturally insensitive language.
UBS was equally clear in its statement: «We apologize unreservedly for any misunderstanding caused by these innocently intended comments,» UBS said. «We have removed the audio comment from circulation. To be clear, this comment was about inflation and Chinese consumer prices rising, which was driven by higher prices for pork.»
UBS' Reputation Harmed
The outrage is spreading despite the remorse expressed and Donovan’s apology and may damage the bank’s reputation in the vast market. The Chinese broker association has called for a boycott of UBS and Haitong Securities has already cancelled all its business with the Swiss No. 1. The CEO of Haitong is also the chairman of the Chinese Securities Association, an industry group that has 124 member firms.
The «shitstorm» comes at a time when UBS is hoping to kickstart its activities in the growth market. Last year, the bank was the first foreign financial institution to be granted a license to acquire a majority in a joint venture in China. UBS is the biggest foreign wealth manager in China.
Carefully Evaluation of Options Needed
The examples of other Western firms that have been involved in similar cases of using culturally insensitive language show that a mere apology won’t usually be enough. Dolce & Gabbana for instance had to cancel a show in Shanghai following public protestations. The Italian clothes firm had circulated a video showing a Chinese model eating pasta and pizza with chop sticks.
UBS will be hard pressed to find the best way to contain the damage. If past experiences are anything to go by, the company may be forced to take much stronger action. China wants Donovan to be sacked. The bank needs to remove from the public’s attention. It needs to carefully evaluate how best to go about this.
