Asia’s technology companies are hoping for a reprieve from four years of tensions between Xi Jinping and Donald Trump © Financial Times

And breathe. Mercedes here from Singapore and that’s the collective reaction of most of the tech industry (certainly in Asia at least) to the prospect of a Joe Biden presidency. But will the election result dramatically change the tech landscape — especially the acrimonious US-China relationship? Not likely, particularly when it comes to the region’s supply chains, according to our Big Story this week. 

For those wanting to dig a little deeper on Mr Biden and Chinese tech, I invite you to feast on some of the analyses in our Sages section. Don't miss the latest regulatory manoeuvres by China and India to put Big Tech companies back in their place (Mercedes’ top 10 and Art of the deal). Elsewhere, the latest Google/Temasek/Bain report on south-east Asia’s digital economy is out and growth in internet users in 2020 is staggering (Smart data). Finally, in a nod to the festive season that is nearly upon us, have a sift through some “life-enhancing gadgets” recommended by How to Spend It. 

While you’re here, I am participating in a panel on Asia's new tech supply chain with my Nikkei colleagues on Thursday at 7.30pm JST. Sign up to the free webinar here.

And finally, a reminder that we are offering a free 30-day trial to #techAsia, which includes access to FT.com. Please spread the word by forwarding this newsletter to friends and colleagues who you think would find it valuable. And if this has been forwarded to you, hello. Please sign up here.

The Big Story

Four years under the Trump administration has transformed the tech landscape in Asia, particularly for China. But a new administration under Joe Biden is unlikely to veer significantly from his predecessor’s hardline approach, according to articles in the Financial Times and Nikkei Asia.

Perhaps the most crucial consistency, experts predict, will be the great supply chain shift out of China. The shake-up in Asia’s tech supply chain, sparked by the Trump administration’s tariff increases and crackdowns on companies such as Huawei and exacerbated by the coronavirus pandemic, is an unstoppable train. For evidence, consider Wistron, a smaller iPhone assembler and supplier to Acer, HP and Dell, whose chairman is convinced the trend will outlast the trade war that sparked it.

Key implications: What experts broadly agree is that while tech competition between the two superpowers will intensify, they expect more predictability and stability from Washington’s China policy. “Biden would like to bring more supply chains back to the US . . . but he’s not going to be as draconian as Trump has been,” says one think-tank.

Upshot: Don’t be fooled, even if strained ties are to a certain degree repaired. There is now no stopping the escalating technology race between the world’s two biggest economies, as historian and film-maker Niall Ferguson puts it in The Wire China. “Even under a Biden administration I don’t think Cold War II stops. It’s structurally programmed to escalate.”

Mercedes’ top 10

  1. South Korea’s world-leading launch of 5G communications services has fizzled: consumers are cancelling contracts due to poor connectivity.

  2. China has taken a leaf out of global regulators’ playbook and unveiled draft legislation aimed at taking its tech titans down a peg.

  3. The latest in the TikTok saga: ByteDance has challenged a White House order that would force a sale of the video app’s US operations.

  4. Chinese electronics maker Luxshare is attempting to break into iPhone manufacturing ahead of schedule as it challenges Taiwanese rival Foxconn.

  5. China’s Tsinghua Unigroup has a crucial role in building up the mainland’s semiconductor industry — but there are concerns over its mounting debts.

  6. Scoop: Japan’s SoftBank is mulling a relocation of the unit that manages its $100bn Vision Fund from the UK to Abu Dhabi.

  7. Pegatron, one of Apple’s largest manufacturers, earned itself a public rebuke following an FT investigation into how thousands of student interns had worked overtime to assemble iPhones.

  8. Indonesia’s pivot to becoming an electric vehicle hub is taking (tentative) shape.

  9. During the second world war, Switzerland’s neutrality made it a safe haven for commerce. Fast-forward 75 years and similar trends are being borne out in Singapore amid the US-China tech war.

  10. The jolly season is nearly upon us and we’ve just the ticket courtesy of How to Spend It: eight little but life-enhancing gadgets.

GrandPad, from £49.95 per month

When sages speak

  • We sifted through some of the strong analyses of what a Biden presidency would mean for Chinese tech and here are a few to get you started. The Observer Research Foundation asks whether Mr Biden will undo Donald Trump’s China tech policy (unlikely) while the Information Technology and Innovation Foundation explores the president-elect’s overall approach to technology (with some mention of China).

  • If you are hungry for some non-Biden analysis, we recommend the first of a two-part series on China’s new digital currency by Merics, a Berlin-based think-tank.

Best of comment

Jack Ma has always told associates he wanted to retire early. Now it is likely he will be forced to actually do so, writes Henny Sender in the Financial Times. The threat to Ant Group — which last week had its IPO cancelled by Chinese regulators — has been mounting in Beijing for many months, but Mr Ma and his closest associate Joe Tsai, who built the group with him since its founding in 1999, did not assign enough weight to it.

The immediate catalyst for the action was at least in part a speech Mr Ma made in October that was critical of Chinese banks and regulators. But in the background, regulators and banks threatened by the rise of nimble new competitors have been lobbying hard to rein in the sector, in particular Ant and its ebullient founder.

China’s plans to create a digital currency and electronic payments system, announced last spring, were in large part a response to concerns that Ant’s Alipay app, and to a lesser extent Tencent’s WeChat Pay, had too large a share of digital payments at the expense of established banks, regulators said. It is a similar story for micro-lending. Alibaba described Ant as a “partner” helping banks lend money to small businesses — but banks and regulators never viewed the fintech company that way.

In retrospect, it is clear that Mr Ma, now 56, has become caught up in a mess that was a long time brewing and is at least partly of his own making.

Spotlight

Yasuaki Takamoto, the executive in charge of Panasonic’s electric vehicle battery business in the US, has sought to play down investor fears of a waning partnership with Tesla in an interview with the FT.

Ties between the two companies have weakened in the past 18 months. Alert #techAsia readers will recall that Panasonic recently lost its status as sole supplier of cells to the US electric vehicle maker. But Mr Takamoto said its business would expand as the total volume of electric vehicles in the market increased. This would be the case even if Tesla made its own battery cells and purchased more from rivals such as South Korea’s LG Chem and China’s CATL.

Mr Takamoto insists that producing batteries in a new and bigger format — as Tesla founder Elon Musk has announced — gives Panasonic a chance “to demonstrate our technological edge”.

But the executive may find Panasonic’s grip over Tesla’s future use of its batteries a little slippery. Analysts say there is a risk that the US group may use Panasonic’s batteries for only a few high-end models, while rival batteries will be chosen for its mass volume vehicles.

Art of the deal

WhatsApp made its breakthrough in India last week, months after Facebook announced it was investing $5.7bn in Reliance Jio, the fast growing local telecoms company run by Mukesh Ambani. The Facebook-owned messaging app has finally been given approval to offer its payments service in the country of 1.3bn people.

WhatsApp can now take the fight to rivals and market leaders Google Pay and PhonePe, backed by Walmart-owned Flipkart. India’s Paytm, backed by SoftBank and Alibaba, has struggled to keep up in the intensifying battle for market dominance.

Like its competitors, WhatsApp Pay is running on the Unified Payments Interface (UPI), a system developed and run by the government that facilitates instant interbank transactions.

That brings us to the latest twist of its India saga. In the same week that WhatsApp payments were cleared to go, the National Payments Corporation of India (NPCI) announced a cap on a single company’s UPI market share at 30 per cent, taking effect on January 1 next year. So far, there is not much clarity on how this will be implemented.

News of the cap comes as Google is being investigated by India’s competition watchdog in connection with its app store and payments service. With its vast population and growing middle class, India is a promising market for payments — yet shifting rules are certainly keeping companies on their toes. For more evidence, read more about how India’s competition watchdog clamped down on Google Pay earlier this week.

— Reporting by Stephanie Findlay in Delhi

Smart data

New users come online in south-east Asia at a blistering pace in 2020

The annual Google/Temasek/Bain report on south-east Asia’s digital economy dropped this week. Particularly noteworthy, according to the report’s authors, is the growth of new internet users in the region. Roughly 40m people came online in south-east Asia this year, compared to 100m between 2015 and 2019 and only 10m from 2018 to 2019. That means there are 400m users in south-east Asia — about 70 per cent of the region’s population.

The surge was led by new digital consumers in lending, education and groceries and the majority were from non-metro areas. As with global numbers, consumers are still spending more time online after coming out of lockdown than they were before.

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