U.S. Firms Object to WeChat Ban -- WSJ
August 27 2020 - 3:02AM
Dow Jones News
Popular app, used for messaging, payments, called vital for
doing business in China
By Liza Lin
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 27, 2020).
SINGAPORE -- U.S. businesses in China are pushing back against a
looming Trump administration ban on Tencent Holdings' WeChat app,
with a report Wednesday shedding light on just how vital the tool
is to companies doing business in the world's second-largest
economy.
The American Chamber of Commerce in Shanghai warned of an
"enormous negative impact" on U.S. companies with international
businesses if the order, whose scope has yet to be revealed, was
enacted too broadly.
The Chinese app, a ubiquitous chat messaging and commercial
platform, has come under the spotlight as technology increasingly
takes center stage in a confrontation between the world's two major
economies. On Aug. 6, President Trump issued an executive order
banning U.S. individuals and firms from transactions involving
WeChat, to be effective from late September, citing concerns over
national security. The order has rattled American firms, concerned
that the ban could be applied beyond the U.S. and in China.
AmCham Shanghai, which includes firms such as Coca-Cola Co. and
JP Morgan Chase & Co. among its 1,400 members, surveyed more
than 140 corporates this month.
Should the ban extend to China and U.S. companies and citizens
there, almost nine in 10 companies said the ban would hurt
operations in China by hindering their ability to effectively
communicate with staff and local authorities. More than half of
those polled said it would result in a loss of competitiveness in
the market, and 42% of the respondents say extending the WeChat ban
to China would result in revenue loss.
More than a dozen firms, including Apple Inc., Walmart Inc. and
Ford Motor Co., have approached the White House in recent weeks to
voice their concerns that the order, typically used in emergency
situations to protect national security, could extend into China,
where the app has become a vital business tool.
WeChat, whose domestic and international versions are used by
more than 1.2 billion people globally, is the most widely used app
in China. Beyond interpersonal communication, consumers in China
use the app to pay for goods and services, while companies
including Starbucks Corp. and McDonald's Corp. use WeChat as a key
marketing tool and e-commerce platform.
Tencent executives said on Aug. 12 that based on its analysis,
the order would be limited to WeChat's international operations,
but there has been no clarity from the Trump administration about
its scope.
Tencent didn't immediately respond to a request for comment.
The AmCham Shanghai survey showed that the app is often used by
U.S. businesses in China to communicate with staff, Chinese
consumers and local government officials. Replies showed there was
no good alternative to WeChat in China, should the platform be
banned. Facebook Inc.'s eponymous messaging app, Instagram and
Twitter are blocked in China and Facebook-owned WhatsApp chat
messenger is sporadically unusable. There is no comparable Chinese
alternative.
Other U.S. business chambers within China have also done member
surveys, but AmCham Shanghai is the first to release poll findings
publicly.
WeChat is seen as a necessity by the local government and
Chinese authorities turn to the app when they seek to communicate
with companies, the chamber said. It cited an example of how
financial regulators often issued directives or window guidance to
U.S. banks using the app, and how the chat messenger was critical
for arranging meetings, as well as hosting functions that enable
firms to make appointments for their business-license application
and registration process.
U.S. logistics companies could also be put at a greater
compliance risk, AmCham Shanghai added. China's logistics regulator
uses WeChat to mandate daily temperature reporting during the
coronavirus crisis. Without WeChat, U.S. logistics companies would
be unable to comply with regulations, the advocacy group said.
In an increasingly cashless society such as China, losing the
ability to take mobile payments using WeChat could also put firms
at a competitive disadvantage, said Ker Gibbs, the president of
AmCham Shanghai. "Customers who use WeChat will be reluctant to
switch platforms and likely abandon U.S. products for their
Chinese, European and other competitors," he said.
Write to Liza Lin at Liza.Lin@wsj.com
(END) Dow Jones Newswires
August 27, 2020 02:47 ET (06:47 GMT)
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