President Donald Trump’s executive orders against two popular Chinese apps have sown confusion. At first glance, telling US companies to stop dealing with WeChat — owned by social media giant Tencent — and video app TikTok, looks like a blow for the tech duo. In fact, limiting access could cause more disruption to US companies.
Messaging app WeChat, which has more than 1bn users, is an indispensable part of doing business in China. The app’s “mini-programs”, or instant location-based pop-ups, are used by US companies such as Starbucks and Walmart to reach local consumers. Users employ them to shop, send gift cards and order coffee. Last year they spent $115bn through the programs.
A number of US companies reaching saturation point at home also rely on China for growth, often advertising on WeChat. Walmart ecommerce sales in China more than doubled over the same period, outpacing domestic growth. Sales of Apple’s iPhone more than tripled by volume to 13m in the second quarter compared with the same period last year. China represents a fifth of sales. Discrepancies are likely to continue. The growth forecast for China this year is 1 per cent, says the IMF, compared with an 8 per cent GDP fall in the US.