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US firms in Shanghai say WeChat ban could hit competitiveness, revenue

US firms in Shanghai say WeChat ban could hit competitiveness, revenue

FILE PHOTO: The messenger app WeChat is seen among U.S. flags in this illustration picture taken Aug. 7, 2020. REUTERS/Florence Lo/Illustration/File Photo

SHANGHAI: US companies based in the financial hub of Shanghai said Washington's planned ban on Chinese messaging app WeChat could badly hit their competitiveness and revenue should it apply to US firms and citizens in China, a survey showed on Wednesday (Aug 26).

The American Chamber (AmCham) in Shanghai said 88 per cent of 142 respondents to a survey it conducted of firms subject to US jurisdiction this week expected negative impact on operations stemming from the loss of WeChat as a communication tool.

US President Donald Trump this month announced an executive order banning WeChat-related US transactions from mid-September citing national security. His administration is yet to detail the types of transactions affected.

WeChat is operated by Tencent, China's biggest social media and gaming firm. It has clocked a relatively small 19 million downloads in the United States, showed data from Sensor Tower, yet is a ubiquitous platform in China for services as varied as games and payment. It is also used communicate with individuals and businesses outside China.

AmCham Shanghai said over a third of respondents to its survey said the WeChat ban could lead to a loss of global revenue, with nearly 5 per cent saying the hit could exceed 5 per cent.

Over 70 per cent of respondents, however, said there would be little or no revenue impact should the executive order be limited to transactions within the United States, AmCham said.

Of the respondents, 88per cent said they used WeChat primarily as a communication tool with employees while 78 per cent use it for marketing. Over 36 per cent have partnership and content relationships with WeChat parent Tencent, the survey showed.

Tencent on Aug 12 said it did not believe the ban would apply to its domestic equivalent Weixin, which could limit its impact on the company.

Source: Reuters

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