Trump's ban of WeChat

[Anderz]

Trump banning TikTok is one thing, banning WeChat is way bigger.

Quote

"Trump’s WeChat Ban Brings Cold War With China Into a Billion Homes" - Bloomberg News, Aug 7, 2020

The Executive Order also prevents U.S. companies from interacting with WeChat:

Quote

"The following actions shall be prohibited beginning 45 days after the date of this order, to the extent permitted under applicable law: 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." - https://www.whitehouse.gov/presidential-actions/executive-order-addressing-threat-posed-wechat/

Almost all payments by Chinese citizens today are done electronically with smartphone apps and American brands such as Nike, McDonald's, Disney and Starbucks use WeChat for sales according to this video:

And that applies to both in the U.S. and in the rest of the world, including in China. I don't know how many U.S. brands, stores, cafés and restaurants are doing business in China, but it's probably a lot. And without being able to sell to the Chinese citizens it will hurt these U.S. companies.

[Anderz]

And also, an iPhone without WeChat in China is like a smartphone in the U.S. without Facebook, Instagram and Twitter combined. Actually it's even worse than that, since WePay in WeChat is together with AliPay what almost all Chinese citizens use for payments. So expect Apple's sales of iPhones and iPads in China to drop like a rock.

[Anderz]

The expert in this video says that it's unclear what the Executive Order means for the operations in China.

Either way, I think the Chinese market for Apple is toast. The Apple stock price will pancake on Monday!!! Well, maybe not, but it looks shaky for Apple, with the additional potential threat that China may stop manufacturing Apple products.

I'm starting to wonder what Trump really means by Make America Great Again. It's like he now has chopped off one leg of the U.S. tech industry. First the Pentagon complained that the Huawei ban will weaken the American semiconductor industry, and now with the WeChat ban Apple is hit by a massive blow.

Edited August 8, 2020 by Anderz

[Anderz]

I found a few news articles about this:

Quote

"Executive Order against WeChat can backfire by hurting Apple, helping Huawei

... And while the order would prevent transactions made by WeChat with U.S. corporations, it may have an unintended effect; the order prevents Apple from distributing WeChat through the App Store. This could result in lower iPhone sales in China where the app is used for many things such as email, browsing, shopping, and making payments.

... WeChat is such an integral part of life in China that if it were to be removed from the App Store, an uproar would ensue. For example, an online forum used by investors in China asked subscribers whether they would give up WeChat or their iPhone if Apple were forced to remove the app from the App Store. By a margin of 20 to 1, the forum's users said that they would drop the iPhone." - PhoneArena, Aug 9, 2020

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"(Bloomberg) -- Banning WeChat, the world’s most-used messaging app, has the potential to upend the international businesses of companies from Apple Inc. to Walmart Inc. and shut down personal communications between America and China." - Yahoo Finance, Aug 7, 2020

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"Apple’s Chinese business could be devastated by Trump’s WeChat ban

President Trump’s executive order banning WeChat could have far-reaching consequences for almost the entire technology industry, thanks to the app’s parent company, Tencent, having investments in companies like Riot Games and other US-based brands. But the ban could also have a big impact on Apple, which is deeply entrenched in China.

Apple has a significant Chinese customer base, and nearly all of its critical manufacturing and assembly partners are based there. Trump’s ban might not only force Apple to remove WeChat from its App Store — which would destroy Apple’s Chinese smartphone business — it could existentially change how Apple is able to build and sell new products in the future.

It’s hard to emphasize the prominence of WeChat in China. As analyst Ben Thompson put it in 2017, “There is nothing in any other country that is comparable, particularly the Facebook properties (Facebook, Messenger, and WhatsApp) to which WeChat is commonly compared." - The Verge, Aug 8, 2020

 

[Anderz]

But the owner of WeChat, the Chinese company Tencent, isn't that just a puny little tech firm? No:

Quote

"China’s Tencent is now bigger than Facebook after adding around $200 billion to its value this year" - CNBC, Jul 29, 2020

If it's business threats Trump is worried about then he should take a look at the Chinese companies Alibaba and JD who probably already are bigger than Amazon. Oh, wait a minute, Trump is probably already writing a new EO.... Hahaha.

[Anderz]

Surely many Chinese investors own Apple shares. And so the Apple Inc. (AAPL) stock price should drop quite a bit. But there are U.S. government safety mechanisms probably installed so Apple's stock price could even increase! Logically Apple's value should crash.

Today so far nothing much has happened to AAPL which currently is at 449. But we will see what happens. My guess is that AAPL will crash today. Because even western investors are able to figure out that the Apple's Chinese market is toast even if Trump should reverse his EO about Tencent.

[Anderz]

I made a lousy prediction. The Apple stock price remained very stable. Embarrassing. Haha. But more seriously I do believe that the Tencent ban or even if the Executive Order is reversed, that it will hurt Apple, including its stock price. In this video a possible drop of 25-30% of iPhone sales is mentioned:

The video also includes news about Qualcomm, a huge U.S. microchip corporation being hurt by the previous ban of Huawei. It's true that also Huawei is hurt and reports that it can't produce more of its Kirin chips, but it seems to me that Chinese companies hide their strongest cards, meaning that Huawei probably already has superior microchips ready to replace the Kirin chips. U.S. companies on the other hand seem to be more open about their level of development. For example I doubt that Intel has developed some superior chips in secret, and instead has in recent years struggled with keeping up with AMD's microchips manufactured in Asia.

[Rolo]

this guy is so dangerous.

[Anderz]

In this recent press conference Trump was asked (from about 15 minutes) about how Apple is worried about the ban of WeChat and not being able to do business with Tencent they won't be able to sell iPhones into China. Trump replied: "Whatever. I will do what's good in terms of the security of our country. We have been badly let down by China. What's your next question?" Yikes, I thought he would say that the Executive Order only applies to business in the U.S. We will see later what actually happens, but that sounded pretty definite to me.

 

[diamondpenguin]

Let's be real here. The only reason everyone else on this forum hates trump is because leo does. And if they dont say they hate trump they're scared of getting banned. That's what's going on here. And we know when people talk about politics it never ends well. Ive never seen it end well ever ever. It ends in a shitshow. On the street, at the dinner table. In the office, in the school. Politics ruins friendships. So fuck politics. 

 

Edited September 12, 2020 by diamondpenguin

[TrustTheProcess]

@diamondpenguin lol, I don't know if the forum hates Trump, but strongly critical of... yeah. I think for good reason. Trumpers did get banned tho... for good reason considering this is a conscious politics forum.