Apple and other US companies may become collateral damage if Washington pushes ahead with its bid to ban WeChat, China’s leading app that pools social networking, mobile payments and a plethora of other functions.
A recent unofficial survey of 100,000 respondents conducted by a public opinion polling mini-app on WeChat showed that 96% would not use Apple’s iPhones or other US devices if they did not carry WeChat, which is considered to be an essential app on the mainland. That could further cement Huawei’s positi0n in China’s local smartphone market.
The result of the poll could spell trouble for several Western technology and consumer goods giants who were caught off-guard when US President Donald Trump signed a presidential executive order last week to pull the plug on WeChat parent Tencent’s business dealings with American firms.
The order has a grace period of 45 days starting from August 6. Because of the dominance of Facebook, WhatsApp and Instagram in the US, the less used WeChat will have less impact in the US than in China.
The exact details of the ban have yet to be spelled out, but the worst-case scenario will thus hardly touch Tencent, with Apple, Google, Microsoft, Dell, HP and others possibly being forced to divorce their hardware and operating systems from WeChat.
To comply with the order, signed by Trump on national security grounds, Apple and Google may offload the app from their respective app stores for both Chinese and American users.
Indignant Chinese netizens are already crying out for retaliation. For instance, there have been calls to deny the makers of iPhones and other devices access to WeChat to discourage Chinese people from buying them and inflict pain on US firms that count on China for a big share of their profits.
The Greater China Region that also includes Hong Kong and Taiwan contributes 20% of the iPhone maker’s earnings. If Beijing signals it intends to retaliate, Tencent will likely be happy to oblige and block iPhones, as any such move would unlikely affect user loyalty to WeChat, the app where many Chinese store their profiles, wallets and contacts.
Trump’s move against WeChat, coupled with any retaliation being mulled by Beijing, will likely throw a lifeline to the ailing consumer business of Huawei as Chinese smartphone and WeChat users would abandon their iPhones and buy more of Huawei’s offerings simply to maintain access to WeChat.
Li Chengdong, a Beijing-based tech analyst with China International Capital Corp Limited, said Trump and his aides may not have understood the business models of some leading American firms operating in China and how they have piggybacked on WeChat to woo customers and drive sales.
For years, American firms ranging from caterers to carmakers have launched official blogs and mini-programs on WeChat to tap the app’s wide-reaching penetration into almost every facet of Chinese people’s lives.
For instance, last year Walmart China touted its deep integration into WeChat to promote business and facilitate mobile shopping. It revealed that transactions and orders channeled from WeChat users accounted for almost one-third of its total sales in the country.
Many Walmart stores in China now only accept WeChat Pay for quicker checkouts, with only one or two manned counters that accept cash. But all this may end if Walmart has to cut ties with Tencent under Trump’s sweeping but vaguely-worded ban.
Wang Xinrui, a senior compliance consultant with Anli Partners, a Beijing-based law firm, said one way to sidestep the looming ban would be for these American firms to set up or use subsidiaries outside the US to keep their partnership with WeChat, even though the app must be purged from US digital networks.
Other observers say the ambiguities in the ban mean American firms still have to tread carefully. Li Shuguang, a popular tech columnist, wrote on Shijie, a tech website, that Trump and the US government could always move the goalposts and interpret the ban to criminalize Tencent and deter any American companies from working with it.
“The US is erecting a tech iron curtain and forcing its companies and other international entities to choose sides. Ironically, Tencent will feel the minimum impact. The Chinese diaspora in the US relying on WeChat to stay connected and the American firms counting on WeChat to do business in China will be hit the hardest,” wrote Li.
Li said there were about three million WeChat users in the US, most of them Chinese expats.
Tencent’s US subsidiary, based in Palo Alto, California, will soon launch legal actions to delay the implementation of the ban. American firms’ lobbyists in Washington may also make a case for continuing to work with Tencent.
Read more: https://asiatimes.com/2020/08/tiktoks-unpatriotic-founder-gets-thumbs-down/
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