Trump has cost Tencent tens of billions of dollars in capitalization, but Nike to Apple will suffer if it bans Wechat!

Tram Ho

After crippling Huawei and destroying ByteDance’s global business, the US recently turned its attention to China’s third-largest tech giant, Tencent. However, banning WeChat, which is considered the center of life for a billion users in China, will have a huge impact not only on China’s second-most valuable tech company but also to US businesses.

The wording of President Trump’s executive decree against WeChat is ambiguous and ambiguous. However, this ambiguity has been enough to make Tencent’s market cap evaporate tens of billions of dollars. Apple – perhaps the most hit American company – was also affected. A tough implementation could force Apple and Google to remove WeChat from the app store, a move that would have a negative impact on iPhone sales in the Chinese market due to the popularity of the app. .

Ông Trump khiến Tencent mất hàng chục tỷ USD vốn hóa nhưng từ Nike đến Apple đều bị ảnh hưởng nếu cấm Wechat! - Ảnh 1.

The lawyers also warned the United States could ban Tencent from using the US computer chips, server systems, and software it needs to operate its operations. US businesses such as Walmart, Coca Cola and Nike will be affected because these are businesses that are using WeChat to market and sell their products. WeChat has largely replaced the use of email in China and is one of the two main mobile payment methods in China and helps the country become a cashless country.

One thing this order cannot prohibit is to prohibit individual users from using WeChat because under the terms of the law that Mr. Trump invoked, the government cannot block any unauthorized access. factor personal and not related to financial transactions. Clif Burns, an attorney for Washington DC-based law firm Crowell & Moring, said that if WeChat or any other business wants to appeal in court, the limits of the law can help.

It seems the decree to ban TikTok and WeChat has been drafted in a hurry. The name of the business that is the subject of the ban, Tencent Holding Co., Ltd., based in Shenzhen, China does not actually exist. Tencent Holding is the Hong Kong-listed parent company while the new Tencent Technology Company is a Shenzhen-based holding company. Some lawyers also contested whether the ban only affected WeChat or the entire operations of Tencent in the United States.

“It’s a dilemma,” said Nicholar Turner, a lawyer at the Hong Kong law firm Steptoe & Johnson. «This also means that US businesses will be limited to technology transfer to Tencent or manufacturers or distributors, in hosting and supporting WeChat applications. Individual users will also be prevented from downloading the app. However, it is not clear how these orders will be applied. »In a brighter perspective for Tencent, the US Commerce Department is likely to focus solely on WeChat’s international operations.

Some analysts believe it is possible that US companies or individuals will not be banned from using the app from China. It is possible that WeChat (outside of China) will be affected, but Weixin (whose scope is within China only) will not be affected. However, the language used in the US government’s order is ambiguous enough that the Department of Commerce can even target Weixin if it wants to.

Tencent has moved to promote the expansion of the WeChat app with foreign users by linking up with Visa, Mastercard and American Express to allow credit cards outside of China to make payments via the system. WeChat Pay payments. In November 2019, WeChat linked up with Symphony, a US financial industry app that aims to allow users to connect between the two platforms.

Even so, the number of WeChat’s actual monthly US users in the US is only 3 million, with the majority being Chinese community as well as Chinese students studying at US universities. Use the app as a primary way to stay in touch with your family and friends back home.

A bigger concern for Tencent than the restrictions WeChat encounters when doing business abroad is that it is prohibited from procuring US-sourced server systems or computer chips for use. in the WeChat business.

WeChat’s server system, like many other systems around the world, often use components from US companies like Intel. The current ban on Tencent does not match the US government’s previous order against Huawei that imposes sanctions and prohibits the company from using the US financial system. But when implemented, this difference probably won’t make much difference if the US government intends to strip the US technology that the company is using.

One more thing that is not clear is whether this order by the US government could affect Tencent’s core business, which is the online games segment, which helps the company achieve growth. sales amounted to 26% in the first quarter year-on-year and stood at 108.1 billion yuan ($ 15.2 billion). Tencent was the only Chinese company in the top 10 most downloaded game and app providers for the past year, according to App Annie, a mobile activity tracker.

The company has also invested heavily in US businesses including Riot Games, best known for its League of Legends game; Epic Games, makers of Fortnite games; Activision Blizzard, creator of the game Call of Duty; Roblox, Reddit, Tesla, Lyft, Warner Music and Snap.

Consult the Financial Times

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Source : Genk