In today’s Finshots, we explore why governments across the world seem to be paying closer attention to Chinese-origin companies.


The Story

Imagine a country asking its citizens to dump a certain phone brand. By dump we mean abandon using it altogether. Seems crazy, doesn’t it? It sounds even more bizarre when you find out that this diktat seemingly originated after the phones were found to automatically detect and censor certain words and phrases — 449 total terms all in all.

And if you were thinking this was a fictional account, it’s not. It’s what happened in the European country of Lithuania just a month ago.

And the company in question? Chinese smartphone giant Xiaomi. Lithuania’s defence ministry said that if you were using a flagship phone sold by Xiaomi and searched for things like “Free Tibet” or “Long live Taiwan independence” or “democracy movement”, you wouldn’t get the results you were looking for. Because China doesn’t want people to understand the nuances of its politics. And while Xiaomi isn’t a state-owned company, it is part of the censorship program and it’s been getting a lot of attention of late.

In fact, the Indian government may also be pursuing a similar agenda.

Sure, they haven’t asked any of us to throw our Chinese phones away yet, but they are probing.

As the Economic Times reported recently, the Indian government wants to set up regulations that will involve in-depth testing of handsets. Its goal — To prevent handsets and pre-loaded apps from snooping on us. Apparently, the government has sent notices to mobile phones manufacturers already, And that includes Chinese companies like Vivo, Oppo, OnePlus, and Xiaomi. What we don’t know is if this was a “special” notice or if it was sent to all mobile manufacturers.

But like Lithuania, India didn’t just go after mobile phone manufacturers overnight. In fact, there’s always a series of events that precede such escalations. Tensions between Lithuania and China began rising after Taiwan announced that its mission in Lithuania would be called the Taiwanese Representative Office. For the uninitiated, China doesn’t like any country acknowledging the independent existence of Taiwan. They’d much rather prefer countries use the name Taipei — a reference to China’s authority over Taiwan. But since Lithuania refused to toe the line, they demanded that they recall their ambassador from Beijing. And after this recent bout of escalation, Lithuania’s defence ministry responded in kind by recommending its citizens to throw away Xiaomi phones.

It’s the same thing with India. The Indian government went after the Red Dragon after Chinese incursions across the border escalated last year.

First, they blocked investments by Chinese entities in Indian companies. This move affected over 150 proposals from China worth more than $2 billion. Then, they banned numerous Chinese apps. Including the popular game PUBG and short video platform TikTok and followed it up by trying to exclude telecom equipment manufacturers Huawei and ZTE from the country’s 5G trials.

Fearing further retaliation, Chinese phone manufacturers tried to show their dedication to India. They announced a step up in investing in production facilities across the country — Make in India and all that.

However, as this report from The Morning Context seems to indicate, the investments promised by some of the manufacturers may have not materialized. And that’s perhaps annoyed the Indian government which in turn may explain the notice.

But once again, this isn’t just unique to India.

The US government, under the Trump administration, put Xiaomi on its list of “Communist Chinese Military Companies” and told its citizens that they cannot own any stock of the company. In May, engineers of the UK’s biggest telecom network BT began to rip out all the Huawei equipment. Even though the exercise was expected to cost another $700 million, it was still deemed necessary.

So countries have figured that Chinese state aggression can be countered, at least to a certain degree by going after the private sector. Now private manufacturers will have you believe that they operate independently and they’ll vehemently deny all links to the Chinese government. They’ll rubbish the snooping and spying allegations too. But it’s common knowledge that the big companies have definite ties to the Communist party.

Take Xiaomi for instance.

  1. In 2015, this private company set up an internal Communist Party organisation related to the ruling government
  2. At its initial public offering in 2018, six of the seven big investors were state-owned entities
  3. Its CEO Lei Jun is a deputy to the National People’s Congress — The ruling party if you’re wondering.

So yeah, there’s a common consensus that the Chinese state may now be inextricably linked to its private sector, and denting their prospects (even at our own expense to a certain degree) may get the Chinese state to stand up and take notice.

Until then…

Don't forget to share this article on WhatsApp, LinkedIn and Twitter