As the renowned Chinese Brand Huawei has been singled outby the US authorities for sanctions, another company Hikvision dealing with video surveillance might be the next one to face the axe. Informed sources pointed out that if these decisions are finalized, the company based in one of the richest Chinese Urban centers might have to face difficulty selling its products in the US market, besides face an embargo on utilizing the US based technology solutions for product upgrades.
The episode, is indicative of the hard fact that the timing of Trump administration to radically redefine the trade ties with China can create recession at both ends. While for the Chinese it will be cut back revenues as the biggest technology consumer market will be off limits; for the US customer, it would entail an entirely new exercise to build up for the losses of the vendor supply chains. It would also include the possibility of price dislocation, entirely new business calculation or the business plan and above all, the new avenues which will have to be sought by the Americans may not ensure the same cost package as well as the quality of the product previously offered in the market.
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Here it may also be argued that while the Chinese have access to most of the prime markets in the world, the unilateral decision by the Americans in the final analysis might dent the Chinese market a bit, but has the potential to hit the US market even more.
Given the fact that the Chinese vendors had made so many inroads into the US market during the last two decades or so, the reverse decision will go down the timeline as an erratic administrative act which did more damage than rebuilt any business environment.
The fears in the market about more Chinese firms to be axed also dawns in the United States business environment what can be called a sort of economic McCarthyism. Trade and business has been the hallmark of the American system, while censorship and restrictions have been the piece of cake of the Marxist systems like China. However what the world is observing after the implementation of the WTO for more than 14 years at the global scale is that dictatorship of the proletariat is willing to trade with the world at large, while the proponents of the free trade regime are enforcing which can be called non-tariff barriers.
Given the fact that the US administration is oblivious of the stance it is taking now, it would be of interest as to how firstly how the Chinese firms denied US market access are going to reposition themselves globally. They might face initial shocks, yet the long term adjustments will set the pace for recovery. Similarly the impact of the Us economy will not be a win-win game as said before.
The trade war being unveiled now by the Trump administration has the potential to escalate into tariff wars, if the Chinese opt for retaliation. The stationing of many US brands vendor base in China by virtue of the parts, components and in some cases complete products being manufactured or assembled in the Chinese mainland; their future in the coming days will be a big question mark. It remains to be seen hw things end up or escalate.