Hi everyone james here in hong kong. more than the pandemic, this decade could come to be defined by the new cold war between the us and china. the world of tech and particularly supply chains is being recast before our eyes. our big story this week highlights three articles that delve deeply into the trends and implications of the changes under way.
As the us-china rivalry intensifies, other countries are getting squeezed. check out spotlight for an indication of how one of japans most outspoken self-made billionaires is feeling. elsewhere, there are appeals for us and european unity in the face of chinese competition (mercedes top 10) and an analysis on how samsung is making significant inroads in 5g (top 10). smart data heralds something that #techasia has long awaited...the europeans are turning up to south-east asias tech party. welcome!
A new cold war between the us and china is accelerating the break-up of the worlds tech supply chain, according to in-depth analyses from the financial times here and nikkei asia here.
In one expression of the rising pressures, us officials have told a big electronics supplier in taiwan to cut its ties to china, sources said. similarly, us officials have met several top taiwanese chipmakers in what appeared to be an effort to draw those companies over to washingtons side in the us-china rivalry.
Key implications: the fallout from this trend is on a grand scale and could last for many years. consumer electronics makers are rethinking their china exposure, with taiwanese companies such as casetek, wistron and merry selling important assets to chinese competitors.
These companies are all suppliers of apple, and apple is now separating its supply chain for china and non-china, said cy huang, a taiwanese investment banker.
Us companies are also cooling their china ambitions. an us business survey last month found only 28 per cent of respondents plan to increase their investment in china, down from 48 per cent in 2019 and 60 per cent in the two preceding years.
Upshot: the idea of unpicking the sophisticated tech supply chain that has grown up in china over the past two decades would have been unthinkable just two years ago. but pressure from the trump administration has made this a reality, with companies from apple to google decamping from china to vietnam, india, thailand and malaysia in the past 36 months.
A new system of regional rather than global supply chains now appears likely. check out this feature on the us-china rivalry over tech standards.
When china allowed elon musk to set up the tesla gigafactoryin shanghai in 2018, it was as if a big catfish had just been dropped into a placid pond, writes james. but the introduction of the industrys apex predator into chinas home market was a calculated move by beijing.
It would force its domestic companies to get stronger in order to compete and, in beijings eyes, tesla would become the apple of the automotive industry.
Apple's engagement with china, where it makes many of its smartphones, has expanded the chinese supply chain because of the imperative for apple to source key components locally. it has also created spillover effects in which technologies originally intended for apple phones have been adapted by suppliers and used by domestic competitors.
One of the reasons why chinese smartphone manufacturers such as huawei, xiaomi, oppo, vivo and others have risen so quickly over the past decade is because apple has continually seeded its chinese supply chain of about 380 companies with the latest intellectual property. the emergence of luxshare-ict, a chinese apple supplier, as a formidable competitor to taiwanese contract manufacturing giant foxconnprovides an example of the power of this influence.
It is the hope of such a spillover effectthat endears tesla to chinese officials. they realise that whatever short-term pain is suffered by competitors such as nio, wm motor, li auto, xpeng motors, byd and others, it is outweighed by the longer-term advantages that flow from the deepening of the chinese electric vehiclesupply chain.
Shigenobu nagamori, one of japans most outspoken chief executives, had some forthright suggestions in this interview about what tokyos position should be at a time of us-china rivalry.
The 76-year-old self-made billionaire says that his company, nidec an electric motor manufacturer has continued to build its presence in china despite the trade war between washington and beijing.
He says that the government of yoshihide suga, japans new prime minister, should deal with both the us and china. no matter what the country or region, the right posture is to show you want to contribute to the other side, he said. the suga government should do just that.
While i am sure there are national security issues to keep in mind, japan is an island country lacking natural resources. unless the world buys our technology, there's no way forwardfor japan, mr nagamori added.
When it comes to investing where the bulk of humanity is also known as asia european players have been more gun-shy than their us peers. this is especially the case for south-east asia and its 655m people. but there are emerging signs of a sea change, according to several recently launched funds with european limited partners.
That includes panta capital, a private equity firm that aims to link european money with indonesia. founder daniel tjoa says south-east asia is not promoted in europe and many dont have connections to invest in the region.
Elsewhere, jungle ventures, a singapore-based venture capital firm, said its latest $240m south-east asian fund had a number of european investors coming on board as limited partners. in 2015 and 2016, jungle raised less than 2 per cent [of] capital from europe, whereas i think [with funds raised in 2019 the figure] was closer to 35 per cent, said amit anand, jungle managing partner.