US tech corporations on the retreat: “It will get serious when Apple leaves China”

US tech companies on the decline
“It will get serious when Apple leaves China”

Tech companies are strictly regulated in China. Strict censorship affects social networks in particular. As a result, more and more US companies are leaving the Chinese market. China expert Löchel tells ntv.de who is particularly suffering from this deduction and what companies are at stake.

ntv.de: There is strict censorship of online networks in China. That is why Facebook did not even start there, the Google services have not been available for a long time, LinkedIn recently closed its platform and now the Internet veteran Yahoo is withdrawing. Is there no end to the migration of US online services from China?

Horst Löchel: As far as social networks are concerned, I already expect that even more foreign companies could withdraw from the Chinese market. Precisely because the regulatory provisions have recently been tightened again – and this is completely independent of the restrictions that already applied before. It is now becoming difficult for American social media companies in particular to guarantee their performance for Chinese customers.

What are the current regulations like?

Online platforms in China – not only foreign ones – are obliged to make data of Chinese users available to the authorities upon request and to block or remove content on known politically sensitive topics that is prohibited in the country.

Have conditions worsened under Xi Jinping?

Prof. Dr. Horst Löchel is head of the Sino-German Center at the Frankfurt School of Finance & Management.

Overall, the regulations have been tightened in many areas. This summer in particular there was a considerable tightening, especially in the capital market area, if you think of the stopped IPOs of Ant Group and Didi, for example. Yes, doing business in China hasn’t gotten any easier.

Which international tech company might be next to announce its withdrawal from China?

Naming a company is difficult. But I don’t expect foreign high-tech or online companies to withdraw from China. After all, Apple is also well represented in the Chinese market. The Chinese authorities tend to focus more on social media, which enable the free exchange of opinions according to Western standards. You don’t want to lose control of your sovereignty. As long as companies focus on other areas, China has no interest in ousting them from their market. But on the contrary.

How long can international online services still operate in the strictly regulated Chinese market?

That is hard to say. Either way, however, it must be stated that with the messenger service Wechat and the trading platform Alibaba, Chinese companies dominate the social media market in China. Yahoo and Linkedin were especially important for the Chinese when they wanted to communicate with people outside of China. Within the country, most things run through Chinese providers anyway. In this respect, the loss for American companies will not be too great. Depending on their presence in the Chinese market, they are not.

What is at stake for international companies if they do not obey the Beijing guidelines?

You lose access to the largest consumer goods market in the world. In China, more people buy online than in any other country in the world. Around 30 percent of all consumer goods now take place online. And the middle and older age groups also have a great affinity for technology. If a company is not represented here, it is excluded from consumers and the corresponding business opportunities.

To what extent has hasty obedience become part of everyday life for international technology companies in China?

Every company has to decide for itself how far it wants to and can adapt. In China, the luck of the large numbers beckons. For this it can be worthwhile to make concessions. Either way, it is not the job of companies to initiate political changes. That’s where politics is called for. To think that political change can be achieved by withdrawing from China seems to me to be rather naive.

Some western companies seem to no longer want to accept this.

Well, we’re talking about social networks that are withdrawing for these reasons. Or maybe the businesses of Linkedin and Yahoo in China weren’t really successful economically. They certainly did not have a large market share. In any case, Apple and other technology companies are currently making no move to leave the Chinese market. It’s just too profitable for that.

Brakes the regulation Company in your own country? Or do Chinese companies even benefit from it?

The Chinese companies are adapting to the regulatory requirements. I don’t think this will harm a social network like Wechat. This is primarily about private exchanges and online purchases, not political debates.

What are the consequences of the withdrawal of international companies for the Chinese economy?

The Chinese market is of course becoming less international with each withdrawal. However, the proportion of foreign companies in China is already relatively low in a global comparison. Otherwise it has no economic impact on China. It only gets serious if, for example, Apple or Starbucks – if we stick with the US companies – said we are withdrawing from the Chinese market.

But overall, China is still not in any way forced to accommodate western companies so that they do not leave the Chinese market?

That depends on the market. Certainly not in the area of ​​social media. But foreign companies from the high-tech industry are of course very welcome because they help China to become an advanced industrial nation on a par with the USA and Europe. China wants to return to the top of the world, as was the case in the west before the industrial revolution.

Juliane Kipper spoke to Horst Löchel

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