On Tuesday, National Legal and Policy Center presented a “Communist China Audit” proposal at Merck & Co., Inc.’s annual shareholder meeting that would require the company to produce a report that addresses its vulnerabilities related to its extensive business in the communist country.
The company’s board of directors opposed our proposal, as explained on pages 90-91 of its proxy statement. (Chairman/CEO Robert Davis pictured above)
Speaking as sponsor of the resolution was Paul Chesser, director of NLPC’s Corporate Integrity Project. A transcript of his three-minute remarks, which you can listen to here, follows:
Merck’s disclosures about its business in China are better than most of the eight other companies where we have presented this proposal.
That said, the disclosures are still woefully inadequate and not nearly transparent enough.
Merck states in its 10-K annual report that the Company’s business in China “has grown rapidly in the past few years.”
Indeed, according to the Company, the China region represented nearly 9 percent of its sales revenue in 2022.
Merck says the importance of China to the Company’s overall business outside the U.S. has “increased accordingly.”
The Company says it also has substantial research and manufacturing in China.
According to an English translation of its China website, Merck reports $48.7 billion dollars in annual sales and $12.2 billion dollars in annual R&D expenditures.
That is significant by any measure.
Yet the bare-minimum risk disclosures related to business in China that Merck provides only address vague “geopolitical tensions.”
That is not transparent enough, nor detailed enough, to sufficiently inform shareholders about the sizeable risks of doing business in, and with, communist China.
When you operate in China, as Merck does and hopes to do more, you are in business with the communist government.
Every business partner is tethered to the oppressive leadership, their malicious whims, and their evil deeds.
Here is a short list that further explains who Merck’s communist business partner is:
1: The U.S. State Department reports that China runs forced labor camps filled with political dissidents and religious minorities, primarily Muslim Uyghurs.
Victims are trafficked to these camps and are also subject to torture, organ harvesting, and extermination. Human rights organizations call it genocide.
2: China has built its military to historic size and strength, and plans to further modernize it, with an eye towards an attack on Taiwan to “reunify” the island nation with the mainland.
An action of this type would make the Russian invasion of Ukraine look like child’s play. How would Merck respond to such an action?
3: Of course when it comes to medicine and research, the free world has almost universally concluded that the deadly COVID-19 virus emerged from a lab in Wuhan.
What is the nature and extent of Merck’s $12.7 billion-dollar annual R&D in China, and why shouldn’t investors be concerned?
If I had more time I could also address things like intellectual property theft, espionage, freedom of movement, freedom of association, freedom of speech, Zero COVID policies, taking over foreign businesses which include American ones, and so on.
I urge the Board to be more transparent about Merck’s vulnerabilities in China, and for my fellow shareholders to vote for Proposal number 5.
You can view NLPC’s shareholder proposal for Merck & Co., Inc.’s annual meeting here.
You can listen to Chesser’s delivered remarks in support of the proposal here.