A reporter from securities times u00b7 e company recently interviewed a number of senior executives, experts in the field of science and technology, legal personages, university professors, etc. all parties agreed that although under the decree against Chinese enterprises, political factors outweigh the law, in the face of such unfair treatment, Chinese enterprises should not be silent Lambs, and should take the initiative to initiate lawsuits. The legal provisions that can be cited include the United States Violation of freedom of speech in the first amendment to the constitution, the inviolability of private property in the fifth amendment to the constitution, and the provision of reliable evidence for the presidents prohibition of trading in the defense products act of 1950, etc.
For enterprises that have not been targeted by the United States, professionals suggest that they should take precautions before doing good deeds, reduce or suspend transactions in sensitive areas, try low-risk countries more, and consider suppliers from non-U.S. regions in addition to strengthening independent research and development for the use of relevant technologies. The US strategy of suppressing China will not change. Do not have unrealistic illusions about the United States. Experts stressed.
A vague ban is coming
On August 5 local time, U.S. Secretary of state pompeio announced five measures to establish a clean network in the United States. Among them, seven Chinese companies, including Tencent, Baidu, Alibaba, Huawei, tiktok, China Mobile and China Telecom, were named to threaten the personal information security of American citizens. Pompeio also said that efforts are being made to step up the removal of all untrusted Chinese app apps from the US digital network.
On the evening of August 6, U.S. President trump signed an executive order declaring that from September 20, i.e. 45 days later, American companies would be prohibited from conducting any business transactions with the byte skipping of tiktok parent company, and companies violating the order would be punished. Another administrative order will prohibit U.S. individuals and enterprises from engaging in any wechat related transactions with Tencent.
Affected by the ban, the three major A-share indexes went green on August 7. Tencent holdings fell 5% in response to the call, and fell 10% in the session. The market value once evaporated to more than HK $500 billion. China capital stocks also suffered a collective heavy fall, with those from who Xue, Xunlei, financial one account and happy gathering times all fell by more than 10%.
In this regard, on August 7, Beijing time, byte beat strong statement said that the U.S. government ignored the facts, did not follow due process of law, arbitrarily decided the terms of the agreement, and even tried to interfere in the negotiation between private enterprises. If the U.S. government cant give us justice, the company will go to the U.S. court. According to the latest news,
Tiktok will sue the trump administration as soon as Tuesday.
It is not groundless for the two companies to react in this way. A number of senior Chinese and American lawyers told the securities times u00b7 e company that the administrative order issued by trump was vague and unclear in scope. At present, Chinese enterprises need to consider not only legal issues, but also political factors.
In terms of revenue, Tencent, as the worlds largest game publisher, cooperates with a number of game companies in the United States. For example, riot games Inc., the famous game company that developed the League of heroes, is a wholly-owned subsidiary of Tencent. After the market tumbled on the same day, a US official clarified that the US presidents ban on Tencent was limited to transactions related to wechat. However, what is relevant remains in the hands of the U.S. Secretary of Commerce. For example, it is not clear whether Tencent uses the money earned by League of heroes to develop wechat business, which is within the scope of the ban.
In fact, tiktok was targeted by the United States before the U.S. announced the net clearing operation. On July 31, trump said he would ban tiktok from operating in the United States, and then it came out that it might be taken over by Microsoft or another company. On August 2, U.S. Secretary of state pompeio said that the trump administration will soon take measures against some Chinese software, including tiktok and wechat, which are believed to threaten the security of the United States.
On August 3, both Microsoft and byte beat disclosed that they were discussing a cooperation plan, that is, byte hop would sell tiktoks US business to Microsoft. Tiktok now faces a September 15 deadline to either sell its U.S. operations to Microsoft or face a total ban.
Liu Xingliang said that the development environment of the U.S. Internet is very mature, and the competition is also quite fierce. If Chinas Internet wants to take root and improve in the U.S. Internet field, it must need a huge amount of investment. Tiktok has achieved a small development in the United States, one of the reasons is that it has invested a huge amount of advertising in Facebook and other areas.
Trumps ban not only made tiktoks huge investment in the U.S. market a bubble, but also forced byte to give up a growing child. Liu Xingliang said that although it is common to sell the company to other suppliers after the enterprise has been established to a certain extent and strive for a good price, byte skipping is actually forced to sell tiktok to Microsoft. Firstly, tiktok is in the stage of rapid development, and it is not because tiktok encounters a development bottleneck to sell its equity. Secondly, byte hopping has no price negotiation After all, if you choose not to sell, tiktok will be banned in the United States, and then tiktok will be worthless.
It is understood that India and the United States are the two major markets of tiktok. According to sensor tower data, as of February 2019, tiktoks total global download volume has exceeded 1 billion. By the end of April 2020, this figure has exceeded 2 billion, including 165 million downloads in the United States, which is equivalent to half of the total population of the United States.
While tiktok is booming, its revenue is also rising. Tiktoks global revenue last year reached US $176.9 million (about RMB 1.24 billion), five times that of the full year of 2018, including US market revenue of US $36 million. In June 2020, tiktok attracted more than $90.7 million in global app store and Google play, 8.3 times as much as the same period last year, higher than youtube, Netflix and Facebook. If calculated by 8.3 times of the same period last year, tiktoks business revenue in the U.S. market this year will be several hundred million US dollars, while byte hop has estimated that tiktoks US revenue will reach 1 billion US dollars in 2020.
How is Tencent affected?
As for the geometry affected by wechat and Tencent, there are two interpretations in the market at present.
One view is that Trumps ban means that wechat will be completely banned in the United States like tiktok, and American users will not be able to use wechat. However, Tencents other businesses related to wechat in the United States, such as games, advertising, payment and investment, will not be affected. Other businesses can pay or trade through other channels, and wechat will not be able to use wechat from Apples a Ppstore and Googles Google play are off the shelves, so only a part of wechat users in the United States are affected.
Another view is that this means that wechat, like Huawei, will be barred from doing any business with US companies. This means that not only American users will not be able to use wechat, but Tencents other wechat related businesses in the United States, such as games, advertising, payment and investment, will also be affected. In addition, Apples app store and Googles Google play will probably be removed from the shelves, because this involves cooperation between the two companies, even if wechat app itself is launched on these two platforms, and No relevant transaction costs have been incurred, but this is also a form of transaction, and both sides still have their own income.
Once Apples app store is removed from wechat, Apples business in China will suffer a heavy setback. According to questmobile, as of June 2020, Apples IOS terminals accounted for 21.6% of the domestic smart terminal market. According to the forecast of AI media consulting data, the number of smart phone users in China will reach 800 million by 2020, so it is estimated that the stock of domestic Apple iPhone may be nearly 200 million. According to snowballs recent micro blog survey, if Apple cant install wechat, 94% of people choose to change to another mobile phone and continue to use wechat..
But if Googles Google play platform is removed from wechat, it will have no impact at all. If Google play is removed from wechat, overseas Android mobile phone users can still download and install APK through wechat official website and other channels. For domestic Android mobile phone users, major mobile phone manufacturers adopt their own app stores and do not use Google GMS service, so they will not be affected at all.
From the literal meaning of Trumps ban , we should ban wechat users in the United States. We probably wont let Apple App store, Google Google play, etc. off the shelves of wechat, because generally speaking, wechat is a free download app for users on the platform, which is not a commercial transaction, and once off the shelves, Apples business in China will be greatly affected. Liu Xingliang, an Internet scholar and President of DCCI Internet Research Institute, said in an interview with a reporter from securities times u00b7 e company.
Liu Xingliang further added that Tencent wechat is mainly used by Chinese in the United States, with a very low proportion among American citizens. The total number of users in the U.S. market also accounts for a very low proportion of all wechat users. Therefore, if wechat is disabled in the United States, Tencent will have little impact on Tencent, while Tencents other wechat related businesses in the United States can support other payment methods. However, the specific impact still depends on the detailed rules of the ban.
According to the annual report of Tencent holdings in 2019, wechat and wechat continue to maintain a high level of user activity, and the number and duration of active users are further improved. As of Q1 2020, the number of combined wechat and wechat accounts is 1.203 billion.
Three reasons: Chinese enterprises do not act as silent lambs
How should Chinese enterprises cope with the fierce storm of net net in the United States? A number of lawyers have suggested to the reporters of securities times u00b7 e company that enterprises facing such unfair treatment should sue, and the provisions involved mainly include violation of freedom of speech in the first amendment to the constitution, the inviolability of private property in the Fifth Amendment of the constitution, and the presidents prohibition of trading in the defense products act of 1950.
According to Yang Yifei, law doctor of Harvard University, tiktok has become a popular we media communication platform like Facebook and twitter in the United States. The U.S. governments targeted shutdown of a certain platform may constitute an improper prohibition and restriction on the content and expression of the speech. In a case in 2017, the U.S. Supreme Court ruled that banning access to social media is equivalent to preventing users from exercising their legitimate First Amendment rights..
Photo source: tuchong creativity
In addition to the prosecution of infringement of freedom of speech, infringement of private property is also a possible direction of prosecution.
According to investigation, the fifth amendment to the U.S. Constitution passed in 1791 stipulates that without due process of law, one shall not be deprived of life, liberty or property; without reasonable compensation, private property shall not be expropriated for public use.
Lawyer Huang Xiaosheng, honorary president of the Chinese Association of Nevada, said: in the United States, private property is inviolable. The app in the mobile phone is also private property. The two apps in Google or Apple App store are also corporate actions. Therefore, the president can not say that the two apps are banned, banned or removed from the shelves. He can only propose and suggest, but not order, otherwise he will be sued.
Article 721 of the defense products act of 1950 of the United States stipulates that if the president judges on the basis of reliable evidence that there are foreigners who control American enterprises through transactions and may threaten the security of the United States, the president may suspend or prohibit these transactions. The fifth amendment to the constitution of the United States also clearly stipulates that no one can be forced to testify against himself.
China has already won the US president
It is understood that in the United States, there are countless cases of citizens and enterprises suing the government, most of which are the infringement of private property and freedom by the government based on administrative orders. After accepting a lawsuit against the government, the court may overturn the administrative order of the government according to the Constitution and laws.
Since trump took office, a number of administrative orders of the trump government have been reviewed or stopped by the court, including the border wall between the United States and Mexico in 2017, the restriction of trade union power in 2018, and the visa of international students in 2020.
In fact, tiktok and wechat are not the first cases in which Chinese enterprises are prevented from trading in the United States on the grounds of threatening national security. In the history of overseas investment, some enterprises have been frustrated and some enterprises have risen up and finally succeeded.
Take Sany Heavy Industrys victory over Obama as an example. In 2012, Rolls Royce, an affiliated company of Sany group in the United States, wanted to acquire four wind power plants in Oregon, but it was blocked by Obamas presidential decree because it threatened the national security of the United States.
Sany immediately counterattacked and filed a complaint with the Federal District Court of the District of Columbia, listing President Obama as the defendant on the grounds that the defendants behavior was illegal and unauthorized.. It also made Obama the first US president to be sued for blocking foreign acquisitions.
On July 15, 2014, the U.S. Court ruled that CFIUS and the Obama administration violated procedural justice and deprived the plaintiff of the property rights protected by the constitution. The US side should follow the corresponding procedures to disclose the non confidential information on which the relevant decisions are based, and give Chinese companies the opportunity to respond after learning the relevant information. March 1 won the first step.
On November 4, 2015, Sany made a comprehensive settlement with the U.S. government, and could transfer four wind power projects to a third party. The US side determined that the acquisition of other wind power projects in the United States did not involve national security issues. Sany group is welcome to declare more transactions and investment projects in the United States in the future.
The U.S. presidents three one-to-one settlement with the U.S. president also rescinded the U.S. presidents three one-to-one settlement with the U.S. president. So far, Sany has achieved the purpose of initiating a lawsuit.
According to Zhou Qing, Chinas chief lawyer, in an interview with the media, the main basis for Sanys lawsuit is that the U.S. government has not only violated Section 721 of the defense products act of 1950, but also violated the administrative procedure law of the United States, private property shall not be deprived without due process in the Fifth Amendment of the constitution, and the peace enjoyed by SANYs affiliated company Rawls in the United States And the constitutional rights protected.
Foreign Ministry spokesman Wang Wenbin also said at a regular press conference on August 6 that many Chinese enterprises currently subject to unilateral sanctions by the United States are innocent, and their technologies and products are also safe. There has never been a network security incident similar to the Snowden incident or WikiLeaks, nor has there been a case of prism gate, formula organization or formula group The Echelon system network monitoring behavior, the United States itself is covered with dirt, still talking about what clean network, this is ridiculous.
Prevention is more important than remedy
It is worth noting that the current political environment in the United States makes it inevitable for Chinese enterprises to go abroad to the United States to encounter many difficulties. Therefore, many people believe that for enterprises that have not been targeted by the United States, prevention in advance is more important than remedy after the event.
Chinas science and technology enterprises are in the rising stage, and the trend is irresistible. Therefore, the United States will restrain Chinas development momentum for a long time. In the future, the world will gradually form three economic regions: the economic zone led by the United States, dominated by North America, and integrated with the supply chain of the industrial chain of the United States; the economic zone with the EU as the center; and the economic zone with China ASEAN as the center The global industrial chain and supply chain will accelerate the restructuring, and it is the general trend to increase the proportion of economic internal circulation. Xiao Yaofei, a professor at Guangdong University of foreign studies, said in an interview with a reporter from the securities times u00b7 e company that under such circumstances, Chinas science and technology enterprises need to rely on their own efforts to develop enterprises and develop science and technology in the game among the three regions.
A number of investment bank investors have suggested that overseas enterprises reduce or suspend trading in sensitive areas and try low-risk countries, such as Southeast Asia and Africa. For the use of related technologies, in addition to strengthening independent research and development, more consideration should be given to suppliers from non US regions.
Another well-known securities firm investment bank analyst told the securities times u00b7 e company that at present, a large number of applications in China are built on the IT infrastructure dominated by the United States, and there is indeed a risk. However, it is undeniable that Huaweis independent IT infrastructure and standards with HMS, Hongmeng and Kunpeng as the core are advancing rapidly. It has been gradually implemented in 2019, and may enter into 2020-2021 Fast landing stage. In the future, Huawei is expected to lead domestic IT enterprises to break the IT underlying standards set by American IT giants and form a new global IT ecological pattern.
On August 6, Yu Chengdong, CEO of Huaweis consumer business, also said at the 2020 summit of Chinas 100 peoples Conference on information technology, Huawei is indeed in a state of lack of core at present. However, in the future, Huawei will take root in semiconductors in an all-round way. In terms of semiconductor manufacturing, Huawei wants to make breakthroughs in EDA design, materials, manufacturing, process, design capability, manufacturing, packaging and testing, and in addition, it will take the lead in operating systems In terms of ecology, Huawei is speeding up the opening of HMS, with a monthly live volume of more than 520 million. Yu Chengdong called on domestic enterprises to build the core competence of the industry. They should go down to the root and pierce the sky upward. Only when the roots are deep can the leaves flourish. The ecology above should be rich and perfect, so that Chinese enterprises can earn more money in the industrial chain and participate in global competition. Huawei hopes to provide a platform for everyone to develop continuously without being controlled by others. There is nothing that cant be overcome. As long as we unite, adjust our expectations, and prepare for a few years of hardship, the Chinese people will not be afraid of difficulties if we can come out of the road of independence and self-reliance. Senior executives of domestic technology listed companies told securities times u00b7 e company reporter. (Wang Jiming, a reporter of securities times, also contributed to this article) source: responsible editor of Securities Times: Yang Bin_ NF4368
On August 6, Yu Chengdong, CEO of Huaweis consumer business, also said at the 2020 summit of Chinas 100 peoples Conference on information technology, Huawei is indeed in a state of lack of core at present. However, in the future, Huawei will take root in semiconductors in an all-round way. In terms of semiconductor manufacturing, Huawei wants to make breakthroughs in EDA design, materials, manufacturing, process, design capability, manufacturing, packaging and testing, and in addition, it will take the lead in operating systems In terms of ecology, Huawei is speeding up the opening of HMS, with a monthly live volume of more than 520 million.
There is nothing that cant be overcome. As long as we unite, adjust our expectations, and prepare for a few years of hardship, the Chinese people will not be afraid of difficulties if we can come out of the road of independence and self-reliance. Senior executives of domestic technology listed companies told securities times u00b7 e company reporter.
(Wang Jiming, a reporter from the securities times, also contributed to this article.)