TWS: Oct. 18, 2021

Graph of the Week | Policy

It’s All About That $₩€£T Cash Mone¥

China’s Negative List is looking more like a “Positive List” nowadays.

The recently revised draft of the 2021 Negative List for Market Access shows Beijing’s intent to continue shaving down the number of industries prohibiting or restricting domestic and foreign investment – a list that has already seen 211 industries removed over the past five years.

The revisions coincide with Beijing’s efforts to bolster foreign investors’ confidence in the Chinese market and reinforce its dual circulation strategy as a new model of development. Foreign direct investment (FDI) is essential to Beijing’s pursuit of self-sufficient industries, as international technology flows can support Chinese innovation. Furthermore, foreign investment-backed enterprises comprise about 25% of China’s industrial output, 20% of tax revenue, and 6.7% of jobs.

Bottom line: In a year marked by regulatory tightening and a crackdown on a variety of industries, improved market access may help sway skeptical investors. While anti-monopoly regulation should be perceived as a wholly different concern from market access, they both aim to improve market efficiency through different approaches.

Business | Technology

Lithuania Smells Something Fishy with Chinese Phones

Not everyone is happy with cheap, Chinese tech. The Lithuanian government is putting a burn notice out on all Chinese-manufactured smartphones after allegations of automated spying and censoring surfaced in Europe.

Lithuania is banning state institutions from using Chinese-made smartphones after its national cybersecurity center found a censorship feature on a Xiaomi phone that allowed the device to detect and censor phrases connected to independence movements in Taiwan, Tibet, and Hong Kong.

Xiaomi overtook Samsung in the European market for the first time in Q2 2021, though the victory may be short lived as governments across the Bloc probe the company as a potential remote censoring agent for Beijing in light of the alleged tradecraft.

Bottom line: As Chinese companies look to expand globally, sticky geopolitics continue to compromise the ability for many brands to find success outside of their home market. Large-scale bans against 5G and Chinese-made tech are only getting more severe as mistrust spreads across politicians and consumers, alike.

Industry | Technology

The 2021 Chronicles: Another Tough Year for Huawei

…and in other Chinese smartphone news…

Huawei saw its share in the global smartphone market continue to slide in Q2 2021 while contenders on both sides of the hemisphere gained ground.

Huawei has long held a strong foothold in the global smartphone market and is known for its top-notch specs at low prices. The past few years have sent the company’s global standing stumbling though as it became a flashpoint for Sino-Western geopolitical misgivings.

Nevertheless, Huawei’s fall is also partly due to the rise of domestic competitors:

  • Xiaomi clocked in as the world’s largest smartphone maker this past June.
  • OnePlus ranked third in North America.
  • Vivo ranked third in the APAC region.
  • Oppo saw a dramatic rise in Q2 global sales.

Apple has also taken a chomp out of Huawei’s sales, with the market share of the California-based giant growing from 48% to 57% over the past year.

Bottom line: Huawei has had a tough go lately, and it’s seen its strong market position gobbled up by local competitors that haven’t been entangled in the same degree of global ire. Still, despite the growing geopolitical minefield – particularly that which separates the West and China, domestic brands continue to focus outwards on developing markets and Chinese tech that can navigate the politically charged waters will have ample opportunity to find footholds abroad.

Business | Industry

Amazon’s China Crackdown: A Costly Lesson for Cross-Border E-Commerce Sellers

Since May 2021, Amazon has banned thousands of stores owned by Chinese companies from its retail platform over fake reviews.

Amazon’s crackdown casts uncertainties over China’s once quickly growing cross-border e-commerce industry. Over 40% of Chinese cross-border online merchants have a presence on the platform, which has resulted in the “made in China, sold on Amazon” industry slogan. Considering the enormous influence of Amazon on Chinese cross-border e-commerce, most companies may opt to comply with the rules of the platform and continue to conduct most of their business on it, despite the existence of emerging but less established alternatives.

Learn more about Amazon’s crackdown on Chinese merchants over fake reviews and how it has thrown a wrench into China’s growing cross-border e-commerce industry in our latest China Insights article:

Full Article

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