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WeChat is banned in the United States

Date: 2020-08-10
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WeChat is banned in the United States



It remains unclear at this stage how far-reaching this executive order is. It could, in time lead to both WeChat and TikTok being removed from Apple's App Store on iOS in the US (unless TikTok is sold to Microsoft in the meantime), and there's certainly a possibility it could affect Apple in China too.

 

China accounts for about 20% of Apple’s iPhone sales, so pulling WeChat off the App Store “would be a serious hindrance,” said Anand Srinivasan, an analyst with Bloomberg Intelligence.

Apple’s shares fell 2.5% to close at $444.45 on Friday in New York, part of a broad decline in technology stocks.

 

While TikTok is highly popular, it is the WeChat ban that could have unintended consequences for Apple. Owned by Shenzhen-based Tencent, WeChat is ubiquitous in China.

 

WeChat is central to digital life in China. It’s the go-to app for a billion people for shopping, payments, email, web browsing and all forms of business and personal communications. Many Chinese don’t use phone numbers or emails. Visitors to the country have to download the app and load it with money or risk not being able to pay for even small purchases.

 

An online forum popular with stock investors asked users if they would give up their iPhones or WeChat if Apple eliminated the app from its store: They voted to ditch their phones by a margin of 20 to one.

 

Compared with 20 years ago, when many Chinese internet technology companies applied to be listed on the US stock exchanges, because the mainland stock market was relatively less developed and had limited reach at the time, the mainland stock market today is well developed, and can help the Chinese companies to grow further by providing more IPO opportunities for start-ups and raising additional capital for established companies.

 

China has enough capital and is making efforts to channel it to Chinese companies, so as to boost research and innovation. In fact, the number of unicorn companies in China by June was comparable to that in the US.

 

If the US believes it can throttle Chinese enterprises by shutting its door on them, it is wrong, because they will develop and expand even without being listed on the US stock exchanges only that US investors won't get a share of their profits.

 

Besides, the return of the Chinese enterprises will further prompt the government to deepen financial reforms and improve securities market governance to internationalize the mainland's capital market, as well as give a shot in the arm to the Hong Kong financial market that needs well-performing companies to boost its growth.


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