Looming Chinese App Bans May Throw Wrench in Global Business
Nicole Shubaderov
International Business Writer
TikTok, a Beijing-based video-sharing social network service, has recently become one of the most downloadable apps in the world. Not only did TikTok surpass Instagram, Facebook, and Facebook Messenger in 2019, TikTok became the second most downloadable application in the world with over 700 million downloads during the year, according to Daniel Boom from CNET. With the app allowing its users to share videos with a large public audience, it became a success with people of all age groups. Content creators have the opportunity to become viral and earn an income from their videos, and organizations can purchase advertising space for their products and services.
For these reasons and more, there is no reason why TikTok should not be as popular as it is today. But this success was intercepted by some backlash from the United States lawmakers who came to believe that the app’s parent company, Bytedance, was collecting data on American citizens and spying on them. With TikTok under scrutiny from American lawmakers, President Trump signed a few executive orders that would ban the app from the U.S. market and prevent Americans from advertising on the app, entering into license agreements, as well as carrying out any transactions with TikTok’s parent companies. Although the details are being further discussed and no ban has occurred between the United States and the Chinese-based company, this ban is a genuine concern for all American and Chinese businesses throughout the world.
Just like what happened to TikTok, a popular Chinese-based messaging app called WeChat is also currently under scrutiny from the United States lawmakers. For the same concerns of national security as with TikTok, United States lawmakers are also working on a similar ban on WeChat to protect American citizens from the surveillance of American citizens by the Chinese government. If the ban does get accepted, it will initially only affect new downloads of the app in the United States– but will eventually work on cutting off full access to WeChat by all American individuals and companies. Although this app is mainly used as a communication tool for individuals to contact their family and friends in China, the ban of this app will be detrimental to those U.S. companies that rely on WeChat for conducting international business with China.
Currently, there is a major block of access to American social network apps due to the Great Firewall in China that censors what Chinese citizens can and cannot access. The primary goal of this firewall is to regulate the internet domestically by censoring foreign networks and preventing cross-border internet traffic. As a result of the lack of social media platforms that Chinese citizens can use that can connect them with their families, friends, and alliances between businesses from foreign nations, WeChat and TikTok have remained the foundation for this communication to occur.
Many American companies rely on WeChat to conduct business with Chinese corporations; if the executive order passes and the ban occurs, many American businesses will be at stake of losing a substantial amount of revenues. A perfect example of this would be Apple: a survey that circulated across Chinese social media platforms has concluded that roughly 95% of the respondents claimed they would switch over to another phone company if WeChat were removed from the App Store. This is a substantial number and would hurt Apple’s sales since this is only taking into consideration those Chinese citizens who were able to submit the survey, not any other citizen of a foreign nation. And, according to Bloomberg.com, China alone has a 44 billion-dollar market for Apple– therefore severely threatening one of Apple’s major markets and sources of revenues. But the main concern is definitely with organizations that may only have WeChat as a source of main communication for business between American and Chinese corporations. There are only so many affordable and easily accessible apps in the market that allow for this communication to occur, and without WeChat, many people would lose their only source of communication for their daily business activities. Sadly, WeChat is one of those social networking applications that are said to have no genuine alternatives. If people are prevented from using the app, many people will be prevented from shopping, paying bills, and communicating with each other. Even with knowing the surveillance that China has over their data, the importance of these apps to American and Chinese citizens far surpasses the cons of using them.
Besides the issue of businesses and individuals being prohibited access to communication between China and America, one of the major concerns for international business in this decade is whether or not the possible benefits when conducting business in foreign developing nations is worth the political risk. With the trade relationships between China and America at a steep decline recently, and the rise of geo-economics increasing around the world, the risk of doing business for any country in either America or China should be a major concern. Although America has not created its own firewall, it seems that America is on the path of following in China’s footsteps. Businesses around the world should be more aware of where and with whom they conduct business with and should be more concerned with whether or not the political risks associated with conducting business in that nation is worth the battle that awaits them in the near future.
Contact Nicole at shubadni@shu.edu