Daily Management Review

Geopolitical Issues Cloud Global Ambitions Of Chinese Tech Companies


Geopolitical Issues Cloud Global Ambitions Of Chinese Tech Companies
Some of the better known Chinese companies in the global technology arena, including names such as the drone-maker DJI, artificial intelligence companies Megvii, SenseTime and iFlytek, surveillance camera vendor Hikvision and e-commerce conglomerate Alibaba Group, are apparently losing out access to various markets.
Take the case of the Huawei Technologies' and ByteDance, the operator of short video app TikTok - two Chinese companies that best reflect the China’s ambitions to rule the global tech industry. These companies are no caught up in a myriad of trained relations of various countries with China – which includes the likes of the United States, India, Australia and the United Kingdom.
The fate of the larger companies has forced a rethink among smaller Chinese firms iht global ambitions.
“What we are experiencing now is unprecedented,” said a Chinese startup founder who has operations in the United States and India but asked not to be identified as he is now considering walking away, said a recent report. “My entrepreneurial spirit has been dampened due to all this, let alone global ambitions.”
The scenario has change dramatically in just over a year when there was little impact on most Chinese tech companies despite the US-led trade war with China and security concerns over equipment supplied by Huawei.
While launching of big IPOs were being planned by SenseTime and Megvii, backed by US investors, unfettered global growth was being enjoyed by ByteDance's TikTok. And while Alibaba was finalizing its plans for entering the global could computing business, domination of the drone business was being consolidated by DJI.
However, in October last year, sanctions against Chinese tech companies imposed by the US, partly because of repression of the Muslim Uighur population in the Western province of Xinjiang, in China, as a big blow to Chinese etch ambitions.
And in the run up to the US presidential elections, Donald Trump, who is running for a second terms, has significantly increased his anti-China rhetoric along with a tough line being taken by Chinese President Xi Jinping.
New security laws passed for Hong Kong has also raised tensions between China and a number of other countries. A Chinese aggression in the Himalayan borders against India resulted in the Indian government banning 59 Chinese apps. 
Amid such apolitically charged environment, top Chinese tech firms are witnessing cancellation of contracts, banning of products and drying up of investments. The future too is snot good as analysts anticipate more restrictions on Chinese tech companies in the near future.
Under a pressure of following the Indian line and banning it from the US, the video sharing app TikTok could be sold off by ByteDance, According to analysts, the worth of the app now is at least $20 billion.
The already imposed bans on its network equipment could see Huawei losing out billions of dollars a year in revenue. Analysts also want that more countries could follow the United States, Britain and others and ban the use of Huawei equipment in telecom networks in their countries. 
Concerns over data security has resulted in the US Interior Department ordering grounding of the fleet of privately held DJI as well as halting of additional purchases. Analysts said more restrictions could be imposed,
After the ban in India of the popular mobile Web browser UC Web, Alibaba Group is cutting staff the subsidiary in India. IPO plans have been shelved by DJI.
Daniel Ives, managing director of equity research at Wedbush Securities said that geopolitical developments are being watched by the companies “with white knuckles”.
It encourages and directs the country’s “strong, reputable companies” to make overseas investments in a compliant manner, said China's foreign ministry, and added that the legitimate rights and interests of Chinese companies would also be safeguarded by other countries.
“International investment is an important engine driver for economic growth. As the global economy is under tremendous downward pressure, all parties should take strong measures to jointly further liberalise and facilitate trade and investment, and create a fair, transparent, and predictable investment environment,” it said in a recent response to the media.