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Home / World / Attempts to restrict Huawei in the US should not affect Alibaba, Tencent

Attempts to restrict Huawei in the US should not affect Alibaba, Tencent



President Donald Trump speaks on May 15, 2019, at the 38th National Peace Officers Memorial Service on Capitol Hill, Washington.

Carlos Barria | Reuters

Chinese Internet giants such as Alibaba and Tencent are unlikely to be attacked in the same way as telecommunications giant Huawei, given the escalating trade tensions between Beijing and Washington, an analyst told CNBC on Thursday.

First of all, the deterioration of Laut Gil Luria, research director at DA, relations between the US and China Chinese companies that are competing with American companies are likely to affect Davidson.

"Focusing on Huawei seems to be motivated by concerns about secrecy and intellectual property, but Huawei is also a major competitor to many American telecom equipment companies," Luria told CNBC.

"Companies with a Chinese focus, such as Alibaba and Tencent, are less directly addressed," he said, adding that their sales in the US are negligible, and outgoing chairman Jack Ma has done a masterly job to position himself friendly to the US "

Yet, he said, these companies could not escape the secondary repercussions of a slowing Chinese economy ̵

1; which was in part put under pressure by increased US tariffs.

" Far-reaching "Implications [19659009] US President Donald Trump declared a national emergency on Wednesday against US technology threats by issuing a decree allowing officials to block transactions in information or communications technologies that pose an "unacceptable risk to US national security." 19659002] While Alibaba, Tencent, un Even Baidu, who may be spared severe restrictions on doing business in the US, may be hurt by other Chinese information technology companies.

"The scope of the contract is potentially far-reaching and could impact many Chinese telecom equipment manufacturers as well as communications service providers," said Rajiv Biswas, chief Asia-Pacific chief economist for global data provider IHS Markit, to CNBC.

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The recent escalation of the technology war between the world's two largest economies was reflected in the decision of the US Federal Communications Commission of May 10, a request by China Mobile for provision of communications services in the US for reasons to reject national security, said Biswas.

The US Department of Commerce said it would put Huawei and its affiliates on the Entity List of the Bureau of Industry and Security (BIS), which would make it difficult for Chinese telecom giants to do business with American companies.

The change from the Trump Administration to Wednesday is a "serious escalation with China, which at least casts doubt on the prospect of further trade negotiations". wrote in a note. "If not done carefully, US and Chinese companies are at risk."

Huawei's worldwide customer networks could be affected if the US fully implemented its steps against the Chinese company because the company would do so. According to Triolo, "it's not possible to update software and perform routine maintenance and hardware exchanges "because there would be no access to US suppliers.

Biswas agreed that the turn of events increases uncertainty about the "far-reaching" implications for non-Chinese communications companies using parts of Huawei and other Chinese network equipment suppliers.

"President Trump's executive order could also have major geopolitical implications for major US allies, such as the UK and other Western European countries, considering allowing the use of Chinese communications equipment in their 5G rollouts," he added.

The US is trying to convince its allies to prohibit Huawei's participation in their plans for the next generation (5G) mobile high-speed Internet. According to Washington, Huawei's technology runs the risk of allowing Chinese spying on these high-speed networks. However, according to Huawei, the security concerns are unfounded. So far, European countries have resisted such requests from Washington, but further restrictions could persuade international airlines to "immediately start on contingency plans," Triolo said.

While Beijing is expected to backfire with some countermeasures against US communications companies Biswas said the wider "US-China technology war will likely take much longer than the trade war, as it focuses on US national security concerns, that are not easy to solve. " Tucker Higgins contributed to this report.

Correction: This article has been updated to reflect that Jack Ma is Alibaba's outgoing chairman.


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