World markets have rallied on the re-ignition of trade talks between the U.S. and China after President Donald Trump and President Xi Jinping’s meeting at the weekend. However, analysts say China is already adapting to the changing enterprise landscape and that trade (and mainly, technological) relations will never be the same again.
Assembly on the sidelines of the Group of 20 (G-20) summit in Japan this weekend, Trump and Xi agreed to reignite stalled trade talks and pledged to hold off on new tariffs on each other’s imports. Predictably, and perhaps short-sightedly, financial markets surged on Monday.
Henrik Naujoks, partner on the global management consultancy Bain & Company, stated that China is making “tremendous” progress in what he described as a “race between the U.S. and China on technology.” In the meantime, Ben Harburg, a managing partner of MSA Capital, characterized Trump’s apparent concession on Huawei as a “reprieve,” saying that it could give the tech agency time to develop its own chip capabilities and operating system.
“Huge amounts of investment and talent are going to be thrown at building self-reliance and establishing a form of parallel technology ecosystem here (in China) without dependence on U.S. chips (and) operating systems,” he advised. Finally, U.S. corporations stood to lose out from this changing world, he mentioned, as Chinese corporations would source their components locally, and promote them in China and emerging markets.
“American corporations within the hardware space like Apple have priced themselves out of markets like Africa, so if American chips aren’t stepping into there, then it’s Chinese chips going into the phones that are being offered locally.”