Wednesday, August 30, 2006
Businesses in China have discovered that defamation litigation can be an effective way to retaliate against critical media coverage and (they hope) deter future bad press. (For an informed discussion that is the product of extensive research, see pp. 68-72 of Benjamin Liebman, Innovation Through Intimidation: An Empirical Account of Defamation Litigation in China, Harv. Int'l Law Journal, vol. 47, no. 1 (2006): 33-109.) The latest example is Hongfujin Precision Industry, the Shenzhen subsidiary of Taiwan-based Foxconn, which has sued two Chinese journalists (not their newspaper) for unfavorable reporting about labor rights violations. (See also the China Labour Bulletin story here.) The scandal in this case is not that Hongfujin has sued - for all I know, it may have a case - but that the Shenzhen Intermediate Court, apparently without notice to the defendants, has frozen all their assets, including residences, automobiles, and bank accounts. (I suspect they still have use of the residence and probably of the autos.)
The Shenzhen courts have already established for themselves a reputation for being sympathetic to local businesses in this kind of case - in the Shenzhen Fountain case, the plaintiff, Shenzhen Fountain Corporation, successfully sued Caijing magazine after the latter published a report questioning its accounting practices. (For details, see pp. 20-22 of Zhiwu Chen, Press Freedom and Economic Development (2005).) Shenzhen Fountain, by the way, was at the time and perhaps still is owned by Deng Xiaoping's niece; she and the company are discussed in this press report.
Because the plaintiff firm makes iPods for the US and other markets, Apple Corp. is in an awkward position and is "working behind the scenes to help resolve the issue", according to its spokeswoman as quoted in the South China Morning Post. The latest news on this is an unconfirmed report that the plaintiff, which had already promised to donate any proceeds to charity, has just modified its compensation request to a symbolic one yuan.