What a difference a couple of years makes. Earlier this week, ZTE, China’s second-largest telecommunications company, was crippled by a ban imposed by the Trump administration for security reasons, before nearly killing the company outright. Weeks earlier, China’s Huawei had its shares stopped from trading on the Hong Kong and New York stock exchanges in a similar move for similar reasons. At last count, those two companies alone accounted for just 9% of global smartphone shipments, yet together accounted for 40% of global business. And in 2017, ZTE and Huawei added only one and two percent respectively to their total market share. Meanwhile, Samsung’s share of the market has grown in each of the past three years, despite global market growth slowing to a crawl:
As Chinese production jumps ahead of U.S. exports, Chinese tech giants are competing with American firms for ever more of the global tech pie, which is the source of the ensuing world turmoil. Thus have we returned to the moment when the government of the United States is cutting off imports and threatening trade wars in an effort to restore American dominance in everything.
ZTE’s punishment, in the wake of revelations that it broke U.S. sanctions and helped North Korea in the manufacture of some weapons, was that it would be blocked from buying all American parts for a decade. And then there was the now-notorious episode in 2017 when China cut off Commerce Department approvals for Huawei’s sale of 4G, or LTE, technology. U.S. government officials demanded that Huawei be barred from using 5G (4G) as well. Even though it said the fine would be $1.5 billion, Huawei still had to pay its fine, which includes efforts to educate its workers about the importance of U.S. technology.
Now, an even bigger Chinese firm has tried to break into the big leagues of U.S. television screens. In an interview with a Wall Street Journal reporter, Oppo, which specializes in (among other things) smartphone cameras, said it is launching its first-ever, 55-inch and 65-inch, Smart TVs in October. I don’t yet know what a Smart TV looks like, but it’s not hard to imagine how it could reinforce Oppo’s claim that it’s the champion of Asian smart phone makers, and anchor itself in the world’s leading television market.
Now, Oppo has not announced prices, nor given a precise release date; nor has it given a hint as to what sort of resolution those TVs will have, or what sort of entertainment they might present in their standard “home cinema” mode, which might or might not satisfy an American audience with its affinity for cinema-size screens. The hardware is merely a component of Oppo’s strategy. And what device is developed as part of this strategy is just as important as what software will be on it.
The biggest potential marketplace for Oppo’s TVs, after all, will be China, where its is the No. 2 smartphone maker. A lower-range Oppo TV, for example, made its debut in October of last year, and was succeeded by an even smaller-range version just last month.
Chinese politics, of course, is a whole lot different than it was in 2007, when Samsung launched its first-ever Smart TV in the United States. And then, when Oppo’s big international debut is scheduled for this fall, it won’t be because the American market has suddenly become awash in $1,500 HDTVs that play high-resolution videos to oversize 4K screens. Rather, it will likely be because the legal and political obstacles facing Oppo, ZTE, and Huawei are much more reduced than they were back then.
We are still in an early stage of a China-American trade war. But the importance of tech-based trade disputes to the American economy, to equity markets, and to foreign governments’ foreign policy is growing—perhaps unexpectedly so.