Weekly Review July 11: Three Hurricanes - Hong Kong, TikTok, and Visas
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When I picked the name East West Hurricane to start this newsletter, I used the word ‘Hurricane’ to symbolise the exciting, fast-paced winds of change happening in Asian tech, media, and business. But hurricanes can also be turbulent events.
To develop this hurricane metaphor even further, I’ve selected three ‘Hurricanes’ brewing right now that best represent the winds of change in East-West relations.
Hurricane 1: Hong Kong
As a place that was under British Rule from 1841 to 1997, Hong Kong has many strong cultural, economic, and political ties to the West. Since being handed over to China in 1997, Hong Kong has gone through a complex transition period that included several serious protests over the last few years and the imposition of a new Beijing-imposed national security law over the last couple of weeks. In response to the new law, most major western tech companies like Facebook, Google, and Twitter have now refused to process data requests by the Hong Kong police, and TikTok is leaving Hong Kong completely. Western governments like the UK and Australia have even proposed new visa laws to welcome people from Hong Kong looking to emigrate.
At the same time, Hong Kong is now where most major Chinese tech companies are choosing to have their secondary public listing. Companies like JD.com, Alibaba, and NetEase have all recently completed secondary listings in Hong Kong, given the recent threats from the US government to delist Chinese companies. And last week, Ant Financial announced their intention to list on the Hong Kong Stock Exchange and not in the United States, which is expected to be the biggest IPO of the year targeting a valuation of $200 Billion. Whatever happens to Hong Kong’s social, business, and political environment next, the way the winds blow represents the state of East-West relations.
Hurricane 2: TikTok
If Hong Kong is the best place to represent East-West relations, TikTok is the best company to represent East-West relations, as the only Chinese social media company to have truly succeeded overseas. Just a few months ago, it seemed like TikTok was on track to become one of the most popular mobile apps of all time. The company broke records in everything from time taken to reach 1 Billion users to number of downloads in a single quarter to time taken to reach $1 Billion in revenue. From a cultural perspective, TikTok was taking over Hollywood and the Billboard Music Charts, while also being used by Gen-Z Kpop fans to sabotage Donald Trump’s rallies.
And then almost overnight, TikTok (along with 58 other Chinese apps) was banned in India, its largest international market. In this Chinese mobile app vacuum, many local Indian apps are thriving, and this creates new opportunities for companies like Reliance. Reliance Jio, who received $5.7 Billion in investment from Facebook among $15 Billion in total investment over the last few months, is likely one of the best placed companies to benefit by creating Indian app alternatives. Even in the US, President Trump and Secretary of State Mike Pompeo’s recent comments indicate a desire to ban TikTok from the US and there was news today about Amazon mistakenly banning employees from using the app. Whatever happens next, the fate of TikTok will help determine the relationship between technology, media, and geopolitics.
Hurricane 3: Visas
I was 15-years-old when I got my first student visa to the United States, moving from New Zealand to attend boarding school in Connecticut. I went on to study at college in Ohio and spent a total of eight years in the US education system. And just like me, there are over one million international students studying in the US, making up 5.5% of the total student population. And you know what? Most of them come from Asia—China, India, and South Korea are the top three countries who send students to study in the US. With the new rules imposed by the US Immigration and Customers Enforcement (ICE) agency, that number will likely drop and students will look either to their home countries or other nations for both educational and professional opportunities. The new restrictions on both student visas and work visas will have many effects we cannot predict, but one thing I believe is that some of the best human capital will shift from the US to other countries, especially in Asia.
In early 2018, I was sitting in a conference room at a co-working space in Karachi, Pakistan. In front of me was a startup founder who had received his Masters Degree in Artificial Intelligence from Stanford. After a few minutes, his co-founder walked in, who had received his MBA from the University of Michigan. They were both born and raised in Karachi and had spent several years studying and working in the US. But they decided to move back to Pakistan in 2017 since the country was improving and economic opportunities were more abundant than in the years of their youth. The push/pull factor here is that places like Pakistan, India, and China are much more appealing now than they were even five years ago. It’s a fairly complex decision for the smartest young minds in Asia as to whether or not you should study in the West. But for many of them, these new US visa regulations suddenly makes their decision easier.
BONUS! Best Asia related media I’ve consumed this week:
Tech Buzz China Podcast, Episode 69: China AI with Jeff Ding - In general, this is one of the best podcasts on China tech and I’m a huge fan! This recent episode is with Jeff Ding, from Oxford’s Future of Humanity Institute. He gives a sweeping and informative overview of China’s AI scene, without all the general media fear-mongering and hype that focuses too much on geopolitical competition.
Middle Earth Podcast, Episode 34: China’s Sports Industry - This is probably one of the best podcasts that focuses on the business side of Chinese culture, media, and entertainment. This episode tackles China’s history of commercial sports, its unique characteristics, and future growth potential vs. other countries. I learned a lot, and think you will too.
As a side note, I’m hosting a free webinar on Tuesday, July 21 with my friend Simon Andrews to discuss TikTok as a major marketing opportunity for brands. Simon writes the brilliant newsletter Mobile Fix and has decades of experience working with some of the world’s biggest agencies and brands. We have an executive from Reckitt Benckiser (RB) joining us, as well as someone from TikTok’s Brand Partnerships Team.
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