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Who Will Benefit From America’s Attacks On Chinese Tech?

Both America and China are suffering from detrimental consequences coming from the decline of competitive advantage among leading enterprises

When President Trump expressed the new punitive intentions aimed at TikTok, most experts propose that it is not the end of it. The tech war between China and the US has officially steps on the fiercest period in this decade. In which, the global technology industry would suffer the threat of depression.

In August, the US released a new rule that the regulated sector is not allowed to purchase any products from companies, which use telecommunication services of five Chinese technology firms, including Huawei, ZTE, Hytera, Hangzhou and Zhejiang.

Along with a previous series of restriction regulations attacking Chinese technology, it not only broke the relationship between China and the US but adversely affect the global internet sector.

Obviously, both US and China are suffering from detrimental consequences coming from the decline of competitive advantage among leading enterprises. From the China government response, several American companies had lost the market share in this largest market.

Fortunately, there are still some sectors benefiting from this war, indicating an optimistic corner against this dark period on Earth.

US government make it difficult for Huawei, TikTok, and Tencent

The fact is China is the largest internet market, which covers the most advanced mobile network globally. Besides, most US IT enterprises consider China as the target and potential market due to the enormous population and tremendous purchasing power in this country.

On the other hand, the powerful accession of Chinese tech giants to the US also threatens local companies. The dominant advantages of those Chinese firms relate to competitive prices and short product life cycles. Evidently, Huawei, a leading smart devices producer, offer 5G devices at 30 per cent lower in price than both Ericson and Nokia, which is one of the victims in the war of America and China.

Obviously, citing the reason that Chinese companies steal users’ data, the US regulators release restriction policy for those companies with the aim to protect local firms and domestic production. Recently, TikTok and WeChat became a target, suffering a ban on national security grounds.

Parent companies owning those apps, ByteDance and Tencent, have been totally restricted from every deal with America.

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That ordinance will take effect this September, which seemingly benefits several US IT firms, especially Microsoft. Significantly, Microsoft will be a potential candidate to take control of all TikTok activities in the US, of which market capitalisation value reached roundly US$50 billion.

In terms of Tencent, it is claimed to be the centre of the Chinese digital economy, which is a dominant technology corporation, serving roundly 1.2 million users globally. Generally, attacking Tencent bring more advantage and challenges compared to ByteDance.

In fact, the total market valuation of Tencent is approximately US$680 billion, making it the second-largest corporation, just under Alibaba. Stopping the growth of Tencent could reduce the spread of Chinese technologies.

According to CNN, due to the restrictions, Tencent would lose its game business to American firms since most game revenue of Tencent came from the US market. Additionally, The White House’s decision might adversely affect the global technology industry. It is due to Tencent is one of the largest investors in this sector, leading to unpredictable disturbance.

China may no longer be the world’s largest factory

Not only Chinese firms suffered losses during the US and China tech war, but Apple and other US companies with factories in China might also be struggling this time. Notably, Apple has spent tons of effort and money to expand its business to China that the tech war could blow away around US$44 billion of its growing motivation.

Once the restriction rule on WeChat takes effect, Apple might need to kick WeChat out of its app store, which means iPhones and iPads could become less attractive to Chinese users.

To prepare for the future, one of the biggest producers of Apple, Foxconn, has started moving its factories out of China, which decided to open new factories in India and Vietnam. Besides, in April 2020, Japan Government invested US$2.2 billion to supports companies moving their factories out of China.

Additionally, many other companies have implemented policies to help their companies not to rely on Chinese productions. As a result, roundly 75 per cent of American firms and 85 per cent of North Asia firms have been shifted out of China.

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Taiwan, Japan, and Vietnam are the real winners

Related to the flop of Huawei in the US and the EU, Japanese tech companies could replace the position of Huawei in those markets. According to Nikkei Review, two Japanese brands, NEC and Fujitsu, are allowed to develop their 5G infrastructure in the UK, after the British government ban Huawei in this country.

Until now, the Japanese government committed to investing more US$654 million to 5G companies such as NEC, which expectedly boost the competitive advantages of the Japanese firm in the global tech race.

According to UNCTAD, Taiwan could be the biggest winner of the tech war between America and China. Recently, there are only three companies in the world could produce advanced chips, including TSMC from Taiwan, Intel from America, and Samsung from Korea.

Since the US seemingly treats Taiwan as a strategic partner, Intel and TSMC are planning to collaborate that the stock price of TSMC has sharply increased. At that time, TSMC plays a central position that both America and China need it to win in the tech race. Many experts believe that TSMC could bring a powerful advantage to Taiwan this year.

On the other hand, if the tensions between two leader countries escalated unexpectedly, Vietnam could have a chance to sharply raise the export value to the US, especially with sectors of electronic assembly, chip production, and semiconductors.

In which, Vietnam could take the market share of Chinese firms and attract more FDI in both hardware and software development sectors. For smartphone production, in particular, Vietnam is recently the largest factory of Samsung with a producing volume of over 240 million units annually.

Furthermore, Foxconn also considers opening its factories in Vietnam in the near future to avoid sanctions to China from the American government.

Final words: Tech war between America and China is predicted to continues this year and beyond. Generally, it harms the global technology industry, which inhibits the development of IT advancements.

Fortunately, there might be some areas that could revive from difficulties, which add some colourful light to a murky picture of the technology sector worldwide.

Source: e20

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