Exclusive
When a US tech blockade backfired
By Li Zheng | chinawatch.cn | Updated: 2019-10-31 17:44

Despite a technological blockade and threats from the United States, Chinese high-tech companies have not slowed down in the past year. On the contrary, the German government recently announced it will not rule out Huawei's participation in its 5G network construction.

Also, Ant Financial, a subsidiary of Alibaba, is preparing to merge its mobile payment service with the Southeast Asian internet giant Grab. And TikTok is very popular in the Indian market, its active users having surpassed Facebook's Instagram. These developments indicate that the Sino-US trade war has not adversely affected the internationalization of Chinese high-tech companies.

One could say that the Sino-US tech cold war, promoted by some China hawks in the US, did not take off. This was because the US overestimated the international community's concerns about Chinese technology companies and underestimated Chinese companies' ability to adapt to and learn from changing situations. Facts show that the tech cold war does not conform to the trend of technological globalization, nor is it a successful model of international technology competition.

One of the strengths of Chinese tech companies is their strategic patience with overseas markets. Take the example of Huawei and Germany's 5G market.

Over the past two years, under pressure from the US, the German government continuously hinted it would exclude Huawei from its list of suppliers.

However, instead of cutting off communication lines, Huawei proposed a series of solutions that could effectively reduce the German side's security concerns, such as signing a "no backdoor" agreement with the German government to ensure the integrity of its products. This persistence finally paid off.

Faced with discriminatory measures by some Western regulatory authorities, other Chinese high-tech companies, too, adopted a cooperative and low-key attitude, which earned them respect.

The second strength of Chinese tech companies was to avoid getting involved in local politics. Chinese companies are primarily engaged in business and consumer sectors such as e-commerce, mobile payments and end consumer goods.

Unlike their US counterparts, Chinese companies avoid interfering in other countries' internal affairs. This strategy was once criticized by Western countries, but is now seen as a very sensible move.

Western technology giants such as Facebook and Twitter have become the main platforms for launching political movements, causing security concerns in developing countries, but Chinese companies have never involved themselves in such disputes. Compared with their US competitors, Chinese companies maintain a distinction between business and politics.

The third strength of Chinese technology companies is to promote two-way openness and deep cooperation between other countries and China.

Chinese technology companies are clear that only partner countries can achieve long-term development, and the mutually beneficial relationship between the two sides will be sustainable. So, while promoting the local use of internet-based industries and services such as e-commerce and mobile payment, Chinese technology companies also actively encourage local businesses to explore the Chinese market.

Take Alibaba for example. It has launched global business, sales, shipping, travel and payment business plans to promote international e-commerce transactions. But the platform has rapidly expanded its merchants and brands to include Southeast Asian countries, and its growth rate has reached 300 percent, thus promoting China's import trade.

Tencent and Huawei also attach importance to mutually beneficial cooperation with local partners and actively support local SMEs.

China's domestic market is thus becoming an important platform for the globalization of Chinese technology companies.

These practices not only allow Chinese technology companies to win overseas markets, but also change the attitude of US technology companies to Chinese partners.

American companies such as Qualcomm and Google once believed that due to the US technology ban Chinese technology companies may rapidly decline while trying to find new partners.

However, the good performance of Chinese technology companies is allaying their concerns. American companies have gradually discovered that the concerns of technology companies around the world are universal.

The difficulties faced by Chinese companies are not special, and these companies are more responsive than similar companies in the US, and perhaps stronger partners for them.

The author is an associate research fellow at the Institute of American Studies of the China Institutes of Contemporary International Relations.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.

Despite a technological blockade and threats from the United States, Chinese high-tech companies have not slowed down in the past year. On the contrary, the German government recently announced it will not rule out Huawei's participation in its 5G network construction.

Also, Ant Financial, a subsidiary of Alibaba, is preparing to merge its mobile payment service with the Southeast Asian internet giant Grab. And TikTok is very popular in the Indian market, its active users having surpassed Facebook's Instagram. These developments indicate that the Sino-US trade war has not adversely affected the internationalization of Chinese high-tech companies.

One could say that the Sino-US tech cold war, promoted by some China hawks in the US, did not take off. This was because the US overestimated the international community's concerns about Chinese technology companies and underestimated Chinese companies' ability to adapt to and learn from changing situations. Facts show that the tech cold war does not conform to the trend of technological globalization, nor is it a successful model of international technology competition.

One of the strengths of Chinese tech companies is their strategic patience with overseas markets. Take the example of Huawei and Germany's 5G market.

Over the past two years, under pressure from the US, the German government continuously hinted it would exclude Huawei from its list of suppliers.

However, instead of cutting off communication lines, Huawei proposed a series of solutions that could effectively reduce the German side's security concerns, such as signing a "no backdoor" agreement with the German government to ensure the integrity of its products. This persistence finally paid off.

Faced with discriminatory measures by some Western regulatory authorities, other Chinese high-tech companies, too, adopted a cooperative and low-key attitude, which earned them respect.

The second strength of Chinese tech companies was to avoid getting involved in local politics. Chinese companies are primarily engaged in business and consumer sectors such as e-commerce, mobile payments and end consumer goods.

Unlike their US counterparts, Chinese companies avoid interfering in other countries' internal affairs. This strategy was once criticized by Western countries, but is now seen as a very sensible move.

Western technology giants such as Facebook and Twitter have become the main platforms for launching political movements, causing security concerns in developing countries, but Chinese companies have never involved themselves in such disputes. Compared with their US competitors, Chinese companies maintain a distinction between business and politics.

The third strength of Chinese technology companies is to promote two-way openness and deep cooperation between other countries and China.

Chinese technology companies are clear that only partner countries can achieve long-term development, and the mutually beneficial relationship between the two sides will be sustainable. So, while promoting the local use of internet-based industries and services such as e-commerce and mobile payment, Chinese technology companies also actively encourage local businesses to explore the Chinese market.

Take Alibaba for example. It has launched global business, sales, shipping, travel and payment business plans to promote international e-commerce transactions. But the platform has rapidly expanded its merchants and brands to include Southeast Asian countries, and its growth rate has reached 300 percent, thus promoting China's import trade.

Tencent and Huawei also attach importance to mutually beneficial cooperation with local partners and actively support local SMEs.

China's domestic market is thus becoming an important platform for the globalization of Chinese technology companies.

These practices not only allow Chinese technology companies to win overseas markets, but also change the attitude of US technology companies to Chinese partners.

American companies such as Qualcomm and Google once believed that due to the US technology ban Chinese technology companies may rapidly decline while trying to find new partners.

However, the good performance of Chinese technology companies is allaying their concerns. American companies have gradually discovered that the concerns of technology companies around the world are universal.

The difficulties faced by Chinese companies are not special, and these companies are more responsive than similar companies in the US, and perhaps stronger partners for them.

The author is an associate research fellow at the Institute of American Studies of the China Institutes of Contemporary International Relations.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.