Security & Fraud

Survey: WeChat Ban Will Hurt U.S. Businesses

President Donald Trump’s executive order to ban WeChat will have the unintended consequences of hurting U.S. businesses in China, according to a new survey.

The poll revealed 88 percent of respondents said if the Chinese messaging, social media and mobile payment app is forced to close, it would have a negative impact on operations — 56 percent said it would lead to a loss of competitiveness while 41 percent said it would hurt revenues.

“WeChat is an essential communication tool we rely on to conduct business in China and outside of China,” one respondent told researchers. “The ban on WeChat is counterproductive and should be reconsidered.”

While 5 percent of those polled said the president’s executive order would not have any impact if it were applied to American companies and U.S. citizens in China, more than 11 percent predicted their financial losses will exceed 30 percent.

The poll was conducted by the American Chamber of Commerce in Shanghai on August 24-25 and included 142 respondents from companies subject to U.S. jurisdiction.

Earlier this month, Trump’s order prohibited “any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd. … or any subsidiary of that entity.” It is expected to start on Monday, September 21.

It’s unclear whether “any subsidiary of that entity” means the order would affect Tencent’s holdings outside of WeChat. If so, the impact for the gaming and payments sectors and any tech company operating in China could be huge.

The Brookings Institution, the Washington, D.C.-based think tank, said continued U.S. access to WeChat is an important concern for the Chinese living in the U.S., in part because access to many American social network apps is blocked in China.

Two weeks ago, analysts estimated how the ban would hurt Apple.

Global shipments of the iPhone could drop by as much as 30 percent if Trump carries out his threat, according to Ming-Chi Kuo, a KGI Securities Analyst.

Big business is fighting such a ban. In a teleconference call with the White House, more than a dozen major corporations raised fears over the implementation of such a ban. These included Apple, Ford Motor Co., Walmart, Walt Disney Co., Procter & Gamble Co., Intel Corp., MetLife and United Parcel Service, Morgan Stanley and Goldman Sachs Group.

“For those who don’t live in China, they don’t understand how vast the implications are if American companies aren’t allowed to use it,” said Craig Allen, president of the U.S.-China Business Council. “They are going to be held at a severe disadvantage to every competitor.

 

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