US President Donald Trump issued an executive order on Thursday that, beginning 45 days after the date of the order, prohibits any transaction that is related to WeChat by any person or with respect to any property, subject to the jurisdiction of the US, with Tencent Holdings.
Although the market share of WeChat in the US is limited, analysts said the US blockade on WeChat is actually part of a larger war that targets China’s tech industry, as Tencent is one of the largest tech firms in the world and represents China’s technology prowess.
“This is an extension of the trade war between China and the US,” Chen Da, executive director of Anlan Capital, told the Global Times on Friday.
“It is a political game, which will have a negative impact on Chinese internet companies going abroad. Chinese companies need to be vigilant about whether other countries will follow the US and block Chinese apps,” Chen said.
A Tencent spokesperson told the Global Times the company is reviewing the executive order to get a full understanding.
WeChat started its move into overseas markets in April 2012 and invited football superstar Lionel Messi as spokesperson for its overseas version in July 2013, which showed that WeChat had great confidence in the US market.
However, insiders suggested that since the market in the US is shared among players such as WhatsApp, Messenger, Skype and Line, WeChat found it hard to win a significant market share initially, unlike its booming performance in China.
US-based data provider Statista said in a survey in September 2019 that WeChat did not rank in the top 10 most popular social media applications in the US, but rather was near the bottom. The top three most popular apps were Facebook, Instagram, and Facebook Messenger.
In fact, the usage rate of WeChat among US users is only 0.79 percent, while it has 1.2 billion active users worldwide by March 31, of whom most are Chinese.
Tencent’s Hong Kong stock closed lower on Friday, down 5.04 percent to HK$527.5 ($75.83) per share, dragging down its market value to HK$5.05 trillion.
Insiders claimed that the biggest pain will be felt by those overseas Chinese users and those who have business operations in China.
“I have lived in the US for six years and as I observed, WeChat has a very large number of overseas Chinese users, almost 100 percent are using it; Americans who have business relations with China also use it,” a white-collar employee in Beijing, surnamed Wang, told the Global Times on Friday.
The Chinese-American population was estimated at 5.08 million in 2016, making it the largest Asian-American group in the US, according to a revised report released by the US Census Bureau in 2018.
“Cracking down on China is a continued national policy of the US; blocking tech companies is definitely part of its plan,” said Chen.
WeChat. Photo: IC
