Categories Analysis, Markets, Technology

Bonding with the dragon in times of trade war

As the trade standoff between the world’s largest economies keeps intensifying with every passing day, there are growing concerns about its impact on the business interests of American companies having operations in China.

Recent developments have exposed a growing penchant among US-based technology companies for closer tie-ups with China. Ironically, while training its guns on China initially the Trump administration had accused Beijing of breaching US’ intellectual property rights. It was also alleged that the Chinese authorities coaxed US firms into transferring patented technology in return for allowing them to do business there.

Oddly, the ongoing bilateral crisis has paved the way for an upsurge in business associations between the two countries at a different level, though the basic idea of the companies is to escape the impact of the trade sanctions.

After pulling out of China about eight years ago, online search giant Google (GOOG, GOOGL) recently made significant progress in its bid to re-enter the once-forbidden Chinese market, at a time when the trade tension is at its peak.

When the crisis started, the Trump administration had accused Beijing of breaching US’ intellectual property rights

However, the company will be rolling out a ‘censored’ version of the search engine that complies with the Chinese content laws. Google, which ended its initial spell in China after a series of censorship-related disputes with the local authorities, seems to be extra cautious this time.

Though a similar outing by Facebook (FB) recently got the green signal from Chinese regulators, it was withdrawn later.

Earlier, billionaire businessman Elon Musk said Tesla (TSLA) is looking for local entities to fund the massive gigafactory being built in China. And what’s more, some market watchers believe Tesla’s China plan is the key to its survival, considering the 25% tariff slapped by China on auto imports from the US.

RELATED: Google on an ethical seesaw

The trend shows that tech companies find the lure of the fast-growing Chinese market irresistible, and most of them don’t even mind going out of the way when it comes to redesigning products and tweaking business policies.

When it comes to Starbucks (SBUX), it’s a slightly different story. The coffee maker this week forged a retail partnership with Alibaba (BABA) after its operations in China, the second largest market after the US, came under serious threat from mounting completion and changing customer habits.  Now, that’s a ‘strategic’ tie-up between two leading multinational corporations.

RELATED: China’s trade surplus with US at a record high

When tremors of the trade war started, the Chinese government made its stand clear assuring that it is not in Beijing’s agenda to target American companies and impose restrictions on their operations in retaliation to Trump’s aggressive stand.

Responding to the latest round of trade sanctions imposed by Trump, the Chinese government Friday announced retaliatory tariffs on imports of US products worth $60 billion. The taxes, ranging from 5% to 25%, will apply to a range of goods including metals, chemicals and those related to agriculture.

RELATED: Will trade war hit tech sector?

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