Huawei, Alibaba, Baidu, the Chinese tech market has grown faster and faster, jeopardizing the American domination on the tech sector. However, as Reng Zhengfei (Huawei’s CEO) said a collision with the US was inevitable. Which means that Huawei already worked on a strategy to bypass the American leadership. Now beside Huawei, it seems that all those Chinese companies have worked their way to avoid being harmed by US policies.
- What are Huawei and other Chinese giants strategies ?
Huawei has always be very clairvoyant to predict the geopolitical state of the world, as Reng Zhengfei said: ”If the west go dark the east will still shine”. In fact, the first “big punch” that the US launched to Huawei was blocking the Chinese company of using the android operating system. However, the aftermath was Huawei launching its own operating system called Harmony OS, the plan is to make Harmony OS the next operating system for all Huawei’s next gen products: smartwatches, smartphones, but also smart cars.
*Huawei Keynotes after Google’s announcement*
Which means that Huawei will get its autonomy from Google’s Android operation system, but on a latest statement Huawei still stated that it will keep using Android operating system until the ban is really effective, confirming that Huawei isn’t fully prepared to leave Google’s operating system, which lead to an agreement of period extension between Huawei and Google to ease the transition, and also to reassure customers that they will still have access to google play and to must used app such as Google Map and YouTube. However, Huawei’s fast reaction showed us that Huawei is able to cop with those kind of geopolitical situations.
“… east will still shine” This sentence also shows us that Huawei is really to play on a regional scale and to focus it’s economy on South East Asia ( don’t forget that Huawei sell half of its product in China). If we talk about Alibaba, Alibaba seems to pulls down from the US, and relocate in South Asia and China. A great stats that underline that is that Alibaba’s strategy of investing in the US is decreasing, there is less and less dollars invested in the US which raise some concerns in the US because Alibaba pulls down cannot help the innovation in the US.
In fact, it seems that the Chinese investments gets lower reaching the lowest scale for 7 years: As an example, we can take the fact that Alibaba only invested in one US company this year.
- Is this new tech cold war a “win” situation for the American companies ?
Recently Apple’s CEO Tim Cook had a dinner with President Trump in order to talk about this new Tech/Trade War that the president was launching between the US and China. The idea between this meeting is to show to President Trump that this war wasn’t good at all for the US companies for 2 reasons: First one is that this trade war makes tax on Apple’s products go up because those products are manufactured in China at Foxconn manufactures. However, Apple’s first competitor have the advantage of having no taxes to pay in China, which makes Trump’s policy gives a great advantage to Samsung. Furthermore, beside taxes Apple has a great interest in China’s market, especially since Apple was the third largest smartphone seller in China, and especially with the fact that the Chinese market is one of the biggest in the world. However, a lot of factors make Apples sale’s in China Decrease: First there is the national economic patriotism , that make locals want to encourage the local brands, and to face those China’s foes in an economic war. The second reason, is also the fact that new products (produced by Oppo, Huawei, Samsung) were much more price competitive then the iPhone. And that is related to the fact that apple cannot lower its prices when it’s taxed by the country where it sells its products.
And if we forget Apple for an instant we can see that the US would suffer much more then China in an economic war, and that’s mainly because the US invest much more money in China then the opposite. As you can see in the graph below:
The sales of the US in china reach 500 bn dollars, but the Chinese sales in the Us only reaches 50 bn dollars in the US.So it seems that in this kind of war there is no real winner, and that the US and its own national champions may suffer much more then China and Chinese champions.