US corporations are having to increasingly juggle concerns of data privacy and human rights alongside profit margins and growth in their dealings with China. Disney looks to be the latest, but certainly not the last, corporation to adjust its expectations amid US-China great power competition.  

Disney’s relationship with China is complicated, with the country being the second-largest market for film releases and home to millions of customers for Disney’s theme parks, TV shows, and consumer products. China has also become an important hub of technological work for the company’s years-long effort to grow its streaming business.

In March 2023, Disney laid off over 300 employees in Beijing, ostensibly citing cost-saving measures. The Beijing team specialised in technology allowing Disney’s streaming services to offer viewers more personalised recommendations, a task necessitating it to have access to some American consumer data. While Disney says it stores all US streaming customer data domestically, the Beijing staff required subscriber information.

Access of US personal data in China, in most probability, was the reason for Disney’s sackings. Data security and the relationship of American companies with China have been the focal point for the US House Committee on China, a congressional committee focussing on economic and security competition with Beijing. Chaired by Republican Congressman Mike Gallagher, the committee has recently turned its attention to Hollywood and Silicon Valley’s business dealings with China.

The layoffs, and Disney’s previously unreported efforts to assuage potential concerns in Washington about China’s influence, represent yet another chapter in its at-times thorny relationship with Beijing, and acts as a prime example of Corporate America’s increasingly-complicated relationship with the People’s Republic.

Mickey Mouse in Beijing

Disney has long been expanding its presence in the Chinese market. In 2019, Disney-owned Marvel Studios sold more than US$600 million worth of tickets in China to “Avengers: Endgame,” propelling the blockbuster film to the second-highest grossing movie of all time. The same year, Disney CEO Bob Iger described in his memoir opening Shanghai Disneyland, which took nearly two decades and dozens of trips to mainland China for negotiations with government officials, as “the biggest accomplishment of my career.”

However, Disney’s relationship with Beijing has had its ups and downs. China has intermittently banned some of Disney’s biggest movie releases, and Chinese Communist Party censors have denied releases to seven of the last ten Marvel movies, which Disney says has contributed to disappointing box-office results for its Marvel Studios; Hollywood’s most successful franchise in the last decade. Disney has also been criticised for filming parts of its 2020 live-action remake of “Mulan” in Xinjiang and offering “special thanks” to several Communist Party agencies in the credits of the film.

The United States and other nations have accused China of committing widespread human rights abuses against Xinjiang’s Uyghur population, a Muslim ethnic minority hailing from the region. China’s Foreign Ministry has vehemently disputed reports of abuses against the Uyghurs and called the accusations lies concocted by the US and other Western governments.

Washington v Hollywood, Silicon Valley, and Ors

Lawmakers on both sides of American politics have articulated concerns in recent years about the Chinese government’s ability to access American user data, seen most spectacularly in the TikTok congressional hearings. China has adopted laws and rules under Xi Jinping’s rule that gives its government access to data collected by companies operating in the mainland. Congressman Gallagher has voiced his concerns that Beijing could use its leverage, particularly in tech and media industries, to access Americans’ user data and influence US pop culture and the wider populace.

In January 2023, Gallagher said he wanted top executives from Hollywood, Silicon Valley, and professional sports leagues, including Bob Iger, to testify before the committee he oversees. Gallagher agreed to travel to California for meetings with tech and Hollywood tycoons, and in April 2023, he and members of the committee interviewed Iger in Los Angeles. Gallagher noted that the meeting went smoothly – more of a fact-finding mission than a grilling session. On the agenda were the lawmakers’ concerns over censorship, film quotas, and revenue sharing with China.

Disney’s handling of the Beijing layoffs has sparked concerns about the risk of data security in China, particularly as American companies increasingly rely on Chinese talent and technology to grow their businesses. The Disney-Beijing relationship is also being closely watched by other companies as they seek to navigate the geopolitical landscape and avoid being caught in the crossfire in the US-China competition. Apple is currently in negotiations with Chinese officials over its foreign app offerings available on its App Store in China. China is moving to introduce new rules to ban unregistered foreign apps, closing a loophole in the Great Firewall that has allowed Chinese Apple users to download popular Western social media apps such as Instagram, Facebook, YouTube, and X.

As for Disney, it remains to be seen how the company will navigate its relationship with China moving forward. While China is an important location for Disney’s products, the company must also juggle its business interests with concerns about data security and human rights abuses.

Disney’s handling of the Beijing 300 serves as a cautionary tale for other companies operating in China, and as US-China tensions continue to rise, it is likely that more American companies will face scrutiny over their operations in the People’s Republic and the potential risks to US national security.

Samuel Ng is a Westpac Asian Exchange Scholar for the National Chengchi University in Taipei, Taiwan. He is currently in his fifth year of Law and International Business at the Queensland University of Technology. He was also selected as a delegate to the Young Australian in International Affairs 2022 Future Leaders Series and the 2021 Australian Crisis Simulation Summit.

This article is published under a Creative Commons License and may be republished with attribution.