China’s foreign ministry has warned that a potential TikTok Ban in the US could have repercussions for American companies operating in China, such as Apple and Tesla. The House of Representatives recently passed legislation that would require ByteDance, the parent company of TikTok, to sell the app to a non-Chinese entity within six months or face a ban from US app stores. However, the bill’s future in the Senate and potential legal challenges from TikTok remain uncertain.
Retaliation from China
If the bill were to pass, China could retaliate, according to analysts. US tech firms are already facing increasing challenges in China due to strong local competition and a climate of uber-nationalism. The Chinese government could retaliate by launching “propaganda brand damage campaigns,” or stifling operations by capping work hours, creating shipping strikes, or impeding permits for new projects. This could be particularly damaging for companies like Apple and Tesla, which generate a significant portion of their revenue from China.
Tiktok Ban Impact on Apple and Tesla
Gene Munster, managing partner at Deepwater Asset Management, believes a TikTok ban has a 25% chance of materializing. If it does, it could significantly impact the China portion of US business revenue for companies like Apple and Tesla. The Chinese government could expand its anti-iPhone campaign beyond the government, mirroring the accusations of spying against TikTok back at Apple. This could potentially reduce Apple’s overall business in China from 18% to 12-15%.
Tesla is also feeling the pressure in China, with shipments slumping as Chinese manufacturer BYD dominates the electric vehicle market. However, Munster believes Tesla might be impacted to a lesser extent than Apple in the event of a ban.
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