The Tech Cold War: What Does Global Competition Mean for Business 4.0?

We are ending 2020 in a very different world than where we began. By the time the clock strikes midnight on 31 December, we will have been through a global pandemic that dealt devastating economic blows, affected millions worldwide, disrupted our day-to-day lives, and reshaped business as we once knew it. The UK will officially leave the EU, most likely without a deal and with several enticing trade options on the table. And with our reliance on tech more prevalent than ever, it’s likely that digital transformation will be a top priority where it was once a ‘maybe.’ 

As the tech race is heating up around the world, relations are becoming frosty as the giants fight for dominance and new startups clamour for space. Nations are racing to gain the global foothold in areas such as artificial intelligence (AI) and machine learning (ML). For years now, there has been a cold tech war silently brewing between several of the top nations, but this year they all seemed to zero in on a common enemy: China. 

China is absolutely a frontrunner in the tech space, but this year brought many widespread rejections of companies, software, and hardware from the nation. But is this to the benefit or the detriment of industries, consumers, and organisations?

The Trouble with China

We saw China’s global reputation deteriorate this year, confirmed by recent research from Pew. In most countries, around three-quarters or more see China in a negative light. In Spain, Germany, Canada, the Netherlands, the U.S., the UK, South Korea, Sweden and Australia, negative views have reached their highest level in 12 years.

These negative attitudes have manifested themselves in a concrete and legislative way. In June of this year, 18 lawmakers from eight nations (Australia, Canada, Germany, Japan, Norway, Sweden, the United Kingdom, the United States, and the European Parliament) partnered to form the Inter-Parliamentary Alliance on China (IPAC), which increased to over 100 members within a week of launch. Today, the total number of democratic nations in the alliance has increased from 8 to 19 after lawmakers from New Zealand, the Netherlands, Lithuania, Switzerland, Uganda, Belgium, the Czech Republic, France, Italy and Denmark legislatures joined.

Impacts on Tech

These negative sentiments have begun to permeate the development of next gen technologies. For example, this summer President Trump issued executive orders banning US transactions with Chinese tech firms ByteDance and Tencent, threatening to ban ByteDance’s highly successful app TikTok in the United States. Two years ago, this month, the chief financial officer and deputy chair of the Chinese telecoms giant Huawei was arrested in Canada in a move many saw at the time as another tech trade-war retaliation from North America. Furthermore, the UK introduced legislation that will cease the installation of Huawei 5G equipment from September 2021 and require this equipment to be removed from the UK’s 5G networks by 2027. This was first announced in July, despite the UK working closely with Huawei for around 20 years. 

Now that Huawei is out, the ‘flavours of the month’ seem to be South Korea’s Samsung, Japan’s Sony and NEC, Sweden’s Ericsson, and the now Finnish-owned Nokia. Whether coincidental or intentional, all of these nations are members of IPAC. The widespread backing of these rival firms begs the question: is the west looking to decouple Huawei, or is it just a casualty of the opposition of Chinese tech in general?

Many of the decisions impacting Chinese tech in the global market stem from political sources, but will have massive economic implications. This illustration by Evan Shapiro shows the global share of tech firms entering 2021. While most of the top earners are American companies, the highest earning non-American companies are Chinese firms Tencent and Alibaba. Both of these firms have been massively influential in driving the development of advanced technologies, especially AI. Not only would removing these firms create a potentially dangerous American monopoly, but will cause setbacks to adoption. Alibaba, Tencent, and other Chinese firms are making great strides in developing hardware and software that will help drive business 4.0. Restricting or eliminating these products from the global marketplace can lead to setbacks in advancement, as it may take other firms more time to catch up and offer comparable products to the market.

Not to mention, the Huawei ban will potentially slow down 5G development in the UK. I recently published two blogs on the subject and the impacts delays to 5G adoption could have on UK enterprise. Reliable network connectivity is more important than ever with more business activities taking place remotely, heavier reliance on the Cloud, and an increase in devices on the network.

Security is of utmost importance here, but it’s also essential that these bans and restrictions are coming from legitimate threats rather than national biases. Every country wants to lead the pack and be on the cutting edge of tech, but it needs to be a somewhat level playing field. Competition in the marketplace is good for driving innovation and for providing the consumer with more options. Why shouldn’t products from companies such as Tencent, Huawei, Alibaba, or Baidu be in the mix?

At the end of the day, it’s the everyday users and consumers who will lose out in this tech cold war. By slowing down high-tech development or limiting access to potentially beneficial next gen tools, businesses may end up missing out on technology that could truly make a difference in their day-to-day performance, competitive advantage, and post-COVID recovery. It will be interesting to see what the new year brings, but hopefully we will take strides forward instead of reaching a standstill.