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New Challenges To Global Tech Industry Posed By China's Ne Export Controls

New Challenges To Global Tech Industry Posed By China's Ne Export Controls
In addition to raising possibilities that some global tech giants could be forced to split their Chinese operations, a broad range of industries could be upset by the latest additions to China’s list of controlled technology exports, according to legal experts.  
For the tech industry that was already struggling to cope with the uncertainty posed by trade tensions between China and the United States, this latest list of technologies under export controls announced on August 28 by China came as an unwelcome surprise for them.
While the new list and the change in regulation by China was initially viewed by experts as a way of Beijing to have a say in the sale of the short video sharing app TikTok, the  potential consequences go much further according to advisers to Chinese and foreign tech companies.
“The rules were a surprise to many in the market, and there is a lot of tension in the tech space at the moment,” said Alex Roberts, a corporate counsel at the Shanghai office of law firm Linklaters.
Drone and cybersecurity technology, voice recognition software, and handwriting scanning software are included in the new list of “partially restricted exports” in addition to recommendation algorithms under the new regulations such as those used by ByteDance-owned TikTok.
Nicolas Bahmanyar, cybersecurity senior consultant at LEAF law firm in Beijing said a range of multi-national companies that are engaged in conducting research and development work inside China could be affected by the new change in the regulation by the Chinese authorities.
“It’s very probable that a company with R&D centres in China are going to face a choice – keep their R&D centre in China, just for China, or leave China so they can use the tech they develop anywhere in the world,” he said.
The Chinese ministry of Commerce reacted fast to the speculations about the new regulations being targeted primarily for the sale of TikTok and confirmed that no single company was targeted by the new regulations.
a wide range of companies across different business sectors could be hit by the broad scope of the changes according to lawyers that have looked closely at the regulatory changes.
The new changes could bring in changes in thinking off firms such as Microsoft, consumer drone manufacturer SZ DJI Technology Co Ltd, video streaming service Zoom Video Communications, and Tencent Holdings that is engaged in the exporting of games worldwide and also runs a cloud-service business overseas that is growing fast.

Tencent is currently awaiting clarification on what the rules would mean for technology-sharing with its oversea units, the company, which has a number of subsidiaries and invested companies overseas, said according to reports quoting sources.
“In general it will impact Chinese companies’ overseas businesses, mainly involving those that provide cross-border services,” said Raymond Wang, managing partner at Beijing law firm Anli Partners.
“It is generally clear from the market reaction that there is some thinking to be done by numerous businesses with operations in mainland China,” said Roberts of Linklaters.

Christopher J. Mitchell

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