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US-China Market Watch: TikTok Ban, Chinese Chip Sanctions, “Mulan” Flops

By Angela Bao
Oct. 5, 2020
(Photo credit): Charley Gallay/Getty Images for Disney

Your monthly roundup of the latest US-China business and industry news.

Judge strikes down TikTok ban, deal still up in the air

A federal judge has blocked President Trump’s order to ban new downloads of Chinese short video app TikTok. Originally, the ban would have stopped new downloads of the app from U.S. app stores after September 27, but with the judge’s ruling, TikTok parent company ByteDance now has more time to work on its pending deal with Oracle and Walmart.

The U.S. government still plans to enact a full ban of TikTok on November 12, should they be unable to reach a deal that would make TikTok a U.S.-based company. Under the preliminary deal, Oracle and Walmart would take a combined 20 percent stake in TikTok Global, a newly formed U.S.-based company that would have Oracle securing its data. However, there have been conflicting statements over the exact ownership structure: Oracle has said that “Americans would be majority owners” and that ByteDance would have no stake in the new company, whereas BytdeDance says it will maintain controlling ownership.

The deal could potentially run into complications on the Chinese side, too. ByteDance has submitted the deal for approval to Chinese regulators, but China’s newest tech export restrictions could hinder the process.

U.S. puts sanctions on SMIC

The U.S. has put restrictions on certain exports to China’s biggest chipmaker, Semiconductor Manufacturing International Co. (SMIC), due to concerns that the chipmaker could be diverting certain equipment for “military end uses.” For such equipment, suppliers would need to apply for an export license in order to sell to SMIC.

Such a move could impede China’s plans to reduce dependence on the U.S. and become self-sufficient in certain high-tech industries, particularly semiconductors. The restrictions could also prove troublesome to non-American companies that use U.S. tech, as well as U.S. companies that do business with SMIC.

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Disney’s “Mulan” disappoints at Chinese box office

Despite being one of the most anticipated films of 2020 and touted as a U.S.-China blockbuster, Disney’s $200 million live-action “Mulan” remake received a tepid reception in both mainland China and the United States. During its opening weekend in China, “Mulan” brought in $23 million—enough to top the Chinese box office that weekend but reportedly far from what Disney hoped for. Audience reactions were mixed, with some saying that the studio was trying too hard to “pander” to Chinese audiences, and others complaining about the lack of historical accuracy. In the U.S. where it premiered direct-to-streaming on Disney+, Disney faced backlash for filming scenes in China’s Xinjiang Province, due to controversy surrounding the government’s treatment of Uigher Muslims.

Another Hollywood film, Christopher Nolan’s thriller “Tenet,” performed better at the Chinese box office, although it has consistently been beaten out by local Chinese titles like “The Eight Hundred.” “Tenet” debuted at $29.6 million and has since grossed over $64 million in China, for a global cumulative of $285 million. However, its domestic performance has been weak, largely due to limited theater reopenings as a result of COVID-19 concerns.

GM “mini car” becomes China’s most sold EV

General Motors’ electric vehicle joint venture in China has beat out Tesla’s Model 3 to become China’s most-sold EV. In August, the Hongguang MINI EV sold 15,000 cars, compared to the 11,800 Model 3 sedans sold by Tesla. The basic model of the MINI EV is priced at around $4,200, which is less than 10 percent of the starting price for the Model 3.

China’s EV market has become increasingly heated this year. Chinese EV makers like Li Auto and Xpeng Motors have cumulatively raised billions of dollars to remain competitive. Xpeng Motors raised $500 million from investors, and Li Auto raised $1.1 billion in its Nasdaq debut. Shares of Nio, another Chinese electric vehicle firm that debuted on the New York Stock Exchange in 2018, were up 240% in August, despite volatility from reports of financial troubles last year.

Beyond Meat makes plans for China production

Beyond Meat’s wholly owned China subsidiary announced plans to build its first production facility in China, making Beyond Meat, Inc. the first multinational, solely plant-based meat company to do so. Beyond Meat is building two manufacturing facilities in the Jiaxing Economic and Technological Development Zone, with trial production to begin this year and full production expected to start in 2021.

Beyond Meat made its debut in China in April of this year, selling plant-based meat in products such as lasagna, pasta and a spicy wrap at Starbucks. They also offered some of their products for a limited time at Pizza Hut, Taco Bell and KFC locations in China.

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