Today, leaders of global TMT companies face complex business and geopolitical challenges, as well as an evolving regulatory environment that is impacting everything from corporate strategy, technology innovation, to customer and supply chain management. Looking ahead in 2021, we identify five themes impacting the Chinese TMT industry: the rise of U.S. China techno-nationalism, increased regulatory pressure on Big Tech around anti-monopoly and data privacy issues, “ The New Normal,” focus on digital transformation and technology infrastructure buildout, and ESG as an urgent business imperative.
Theme One - U.S.-China techno-nationalism and the decoupling of innovation
The rise of U.S.-China techno-nationalism presents a growing set of complex risks to TMT companies seeking to operate across the world’s two largest markets, and is set to further escalate in the years to come. For TMT companies, the risks are especially acute – in addition to the entity list and others, the U.S. Department of Commerce put new rules into effect in March, 2021, empowering the Secretary of Commerce to prohibit virtually any technology industry transaction that involves “foreign adversaries” or poses an undue risk to U.S. national security. TMT companies are especially vulnerable given the complexity of their supply chains, as well as the wide range of applications
for their products – any computer hardware, software or components may easily fall afoul of restrictions.