Firms fearful after US’ flagrant heist of TikTok

Source: Global Times Published: 2020/8/4 21:15:20

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Video conferencing platform Zoom said Monday that the company will suspend all direct sales to the Chinese mainland from August 23 and will switch to a partner-only model in the region.

While its Monday announcement did not specify the reason behind the decision, it is widely believed the move has something to do with concerns over the increasing US scrutiny on its ties to China.

Such worries are not unfounded for Zoom, especially after seeing how unruly the Trump administration is being in its suppression of TikTok. Although Zoom, based in Silicon Valley, is an American company and its founder and CEO Eric Yuan is a US citizen, the company reportedly has a big development team in China, which has long contributed to its relatively low research and development costs over the years, according to its regulatory filing. Previously, the company came under criticism after mistakenly routing some data through servers in China and banning some anti-China users.

Over the past few months, demand for online meeting services, remote office services and online education, among others has soared due to the impact of the coronavirus outbreak. At a time when it could prosper in the Chinese market, Zoom's decision to cut its direct operation with China highlights its eagerness to ride out the potential political storm that may be brewing around the corner.

Unwittingly, the Trump administration's crackdown on Chinese technology companies has grown to such an extent that even American companies are feeling the chill, and the fear of being targeted is superseding the pursuit of profit, a development that is certainly rare to see.  

To a certain extent, market panic has now been amplified to an extreme level amid the US' tech decoupling from China as Washington's unprecedented abuse of national security reasons has gone beyond the imagination of the world.

There is no normal justification for the TikTok ban or the claim for a cut from the forced TikTok deal, which suggests a dangerous tendency that the Trump administration will not play by the book or abide by any existing rules of modern politics and business. It is now totally unpredictable when it comes to ramping up the disputes with China. No one knows who or what the US government will target next, so it is not just American companies with Chinese ties that feel rattled, but European and other Asian companies doing business in China are flustered. 

Some observers believe that the recent US crackdown on Chinese technology companies is due to the upcoming presidential election. Yet, even in the most optimistic scenario that China-US tensions ease under the new administration, the general trend of the tech decoupling between the two countries is unlikely to change when the US government is bent on cracking down on Chinese tech firms. Under such circumstances, Chinese tech teams, talents and capital will inevitably undergo a painful and difficult period, but we believe China's tech companies can survive this round of restructuring of global tech industrial chain.

Posted in: GT VOICE

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