https://apnews.com/article/tiktok-ban-bytedance-bill-divest-5b5a685e8f1e19d22182d62526bf19b8
People might have read the news about Tik Tok. It is still much of a controversy from social media point of view, What interested us are two things. Firstly, we’ve seen the fight back from TikTok by using banners or other means to urge its users to contact congress members to stop the bill. Secondly, we need to look further into the symbolic meaning of this bill toward cross-border investment.
This is not a single case between US and China. Two countries have distanced each other in the past decades after US elites found out that it’s impossible to change the system in China, and meanwhile, Chinese government also found it can no longer just rely on US technologies. The CFIUS has been a major part on top of long-standing export control regulations. 2018 has been a year with significant changes to limit investment in areas that the US is concerned about the most.
| CFIUS legislative timeline |
| 1975: President Gerald Ford establishes CFIUS by executive order. 1988: The Exon-Florio amendment to the Defense Production Act (DPA) codifies the CFIUS review process for foreign investments. 1992: The Byrd amendment to the DPA requires mandatory CFIUS reviews for covered transactions involving foreign governments. 2007: The Foreign Investment and National Security Act of 2007 replaces the executive order and codifies CFIUS in the US code. 2018: The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) expands the jurisdiction of CFIUS and introduces mandatory filing requirements for transactions involving certain technologies, data or infrastructure. |
President Trump invoked his emergency economic powers to impose broad sanctions against TikTok in 2020, a move that steps up pressure on the Chinese-owned app to sell its U.S. assets to an American company at the time. Tik Tok has been working to route all data to Oracle Cloud and set up firewalls between US and China. However, the issue of trust cannot quickly fade out.
Is it wise for TikTok to use its own platform to encourage users to call their representatives? We feel that this action will stir up more trust issues as TikTok tries to motivate its massive user base for political influence. We don’t have a perfect solution here since we are no expert in Government Relationships. I am confident that this company will work out some solution on this trust issue.
More than Tik Tok, The diminishing trust in cross-border investment troubled us. This is indeed a sad situation. As an investment firm, we are not interested in any political-related risks. Hence, we tried out best to stay out of this sensitive issue. Both US and China present different advantages in global supply chain, and it’s inevitable to talk about China when we think about certain industries, for example, display industry, PV industry and mostly recent years, EV batteries. As we are a venture fund mainly support very early stage concept to product stage startups, we are not directly impacted, but because of lacking bigger investors in many of those deep tech areas, we are certainly in-directly impacted.
We have seen a gradual trend since the pandemic that many local Chinese companies are going overseas to become global companies. For example Shein, and many others headquartered in Singapore now. This is a healthy trend for Chinese companies with global competitiveness. Lately, the US IPO of Shein was disruppted by not only China, but also US SEC, and the company is seeking to be listed in London. This is a lose-lose situation for both China and US. We do hope that the situation will change for the better in coming years, even though the change is very slim.
As a business founder, we have to stay positive and find whatever possible from impossibles. From this regard, we are no different from any other founders in every industry. We are still full of optimism in this tough period and we believe we will experience the best spring.
March is the month of expectation,
The things we do not know,”
The Persons of prognostication
Are coming now.