In the weekly column we take turns writing about innovation and economic trends in Asia.
(Photo: Klawe Rzeczy)
The Chinese online retailer Alibaba had actually planned an IPO for its Russian joint venture Aliexpress Russia this year – after all, Russia’s second largest internet retailer. In view of the economic turmoil in Russia as a result of Vladimir Putin’s Ukraine war and the Western sanctions, nothing is likely to come of this. China’s corporations profiting from the war and sanctions gap between Russia and the West? It’s not that easy.
This is shown, for example, by a closer look at the Chinese technology groups. Your business in Russia, which has grown in recent years as a result of stronger bilateral economic ties, is now also suffering as a result of the country’s immense upheavals: problems with cash supplies, ruble collapse, price explosions. In addition, the Chinese tech companies are currently in a very deep economic policy dilemma: the technology export ban by the USA as part of the Western sanctions against Russia also affects many Chinese tech companies – and this happens when their products contain precursors from the USA.
The planned IPO of the Russian joint venture Aliexpress Russia, the second largest internet retailer in Russia, is unlikely to materialize due to the political situation in the world.
(Photo: ullstein bild – SPUTNIK)
For example, if chips from the Chinese semiconductor company SMIC are manufactured with US equipment from Applied Materials, they fall under US sanctions. And the US side has already made it clear that it will closely monitor this China strand of the western sanctions. Because the leverage over the Chinese suppliers is great: China is the largest electronics supplier for Russia: A third of the semiconductors in Russia come from China, with computers and smartphones it is even more than half.
Not only SMIC is affected by the sanctions dilemma, according to a list by the financial news agency Bloomberg, Xiaomi cell phones also contain chips from Qualcomm and Qorvo from the USA. Processors from US companies Advanced Micro Devices and Intel run in Lenovo computers.
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Didi’s withdrawal from Russia gives an idea of the political pressure
The problem for Chinese tech companies: China’s government has explicitly and repeatedly criticized sanctions against Russia as the wrong means. “We oppose illegal, unilateral sanctions without an international mandate,” said the Foreign Ministry in Beijing. The pro-Russian attitude is affecting the mood in China and is currently making it difficult for Chinese companies to position themselves against Russia.
The Chinese online travel agency Didi felt this last week. On Monday – three days before Russian troops invaded Ukraine – Didi announced that he would withdraw from the markets of Russia and Kazakhstan because of “the changed market situation”. Then on Saturday – two days after the invasion – Didi announced a U-turn without justification: the company would remain active in Russia. It is not clear whether it was only the criticism in social networks of the move, which was criticized by nationalist users as belonging to the US, or whether there was even direct political pressure.
>>> Read all current developments on the Ukraine war here: Navalny calls for protests – Tass: Russia and Ukraine continue negotiations today
But on the other hand, what can happen to Chinese companies if they do not comply with US sanctions, all companies have seen impressively using the example of the telecommunications equipment supplier Huawei: Because of the allegation of having circumvented US sanctions against Iran, the CFO Meng Wanzhou was Was placed under house arrest in Canada for 1000 days on an extradition request.
Asia Technonomics
In Germany, there is still much broader and more detailed reporting on economic and innovation trends from the USA than from Asia. Wrong, we think. In our weekly Asia Techonomics column, we therefore want to bring you closer to the most exciting innovation and economic trends from the most dynamic region in the world.
According to the International Monetary Fund (IMF), the entire Asian region lost 1.6 percent of its economic output last year – far less than the USA or Europe. This decline will be far more than compensated for in the current year with expected growth of 7.3 percent. Asia is thus consolidating its economic importance for the world.
As Europe slides into the third Covid wave, infection and death numbers have been far better in Asia since the pandemic broke out. Last but not least, the corona crisis has shown that it is worth taking a closer look at Asia in order to learn for your own country.
We see that our readers are interested in exactly these topics. That’s why we want Asia Techonomics to take a look every week from now on at new technology ideas from Japan or China, billion-euro corporations that are stirring up the stock market in South Korea or Indonesia, tech investments in the Indian market, tests from cuddly robots to laboratory meat restaurants. Nicole Bastian wishes you a lot of fun!
Experts are already warning that Chinese companies and their representatives face heavy fines and imprisonment if they break US sanctions. By the way, Huawei is one of the largest Chinese companies in China alongside Alibaba. With the sanctions in the West, the group has become even more involved in Russia and is, among other things, a strategic partner in the cloud platform of the largest Russian bank Sberbank.
>>> Read here: European subsidiary of Russia’s Sberbank has to close – German savers are particularly affected
Not only Europe and the USA are exposed to geopolitical risks through their supply chains. Taking Russia as an example, the Chinese technology companies are once again realizing that this also applies to them.
In our Asia Techonomics column, Nicole Bastian, Dana Heide, Sabine Gusbeth, Martin Kölling and Mathias Peer take turns writing about innovation and economic trends in the most dynamic region in the world.
More: Ex-Finance Minister of Ukraine: “Companies should not get involved in Putin’s bloody business”