It's been almost a week since the start of conflict between Russia and Ukraine: the damage bill is huge, both in human and economic terms, with implications that are also reflected outside Europe. So far the China it has maintained an at times ambiguous position, expressing itself against the actions of Russia but without adhering to the sanctions of the Western world. However, the Asian giant is also starting to blame the economic damage caused by the conflict. If you look at the technology market, there are companies like Xiaomi who are in a certain sense involved but above all affected by what is happening in Europe.
The consequences of the war between Russia and Ukraine affect the tech world and China
In the case of Xiaomi, let's start by saying that we are talking about a smartphone brand that focuses heavily on the Eastern European market. In 2019 Lei Jun's company managed to become the first smartphone manufacturer in Ukraine conquering almost half of the market. But also in Russia, where the brand holds almost a third of the market: therefore we can understand how such a war cannot fail to affect the sales performance of Xiaomi in Eastern Europe. In these days the Redmi Note 11 series should have been presented in the nation, a smartphone that probably would have promptly become a best seller, given the sales trend of the Redmi Note series.
But also OPPO it should be affected, given that we are talking about the # 3 brand in Ukraine (behind Samsung). Last week it had promoted a price cut for March for OPPO A55, one of the best-selling smartphones in its catalog.
Not to mention Huawei e ZTE, two companies that have helped Ukraine in the construction of telecommunication infrastructures, including internet, 3G and 4G networks. Huawei debuted in Ukraine as early as 1998 and its smartphones continue to be sold in the country, with the brand sitting still in fourth position in the current ranking.
If you exclude the smartphone world, too ByteDance it is in an awkward position to deal with the consequences of the conflict between Russia and Ukraine. In recent days, it has temporarily blocked the Russian RIA Novosti account, as well as deleting controversial videos about the situation. But also Didi, that is the Chinese Uber, which announced that from March 4 it will cease its taxi business in Russia and Kazakhstan "due to changing market conditions and other challenges".
Unlike Russia, Ukraine is actively part of the Belt and Road Initiative, the New Silk Road that China is building to expand its business out into the Middle East and Europe. Countries like Ukraine and Poland should have been a "bridge to Europe", but the geopolitical changes underway represent a significant block. Also because significant road and railway arteries are and should have passed from Ukraine for the transport of goods from east to west, risking to aggravate the already prevailing transport and supply crises.
Will Russia become the new Iran?
Do you remember Meng Wanzhou, CFO of Huawei that the United States arrested (and then released) due to fraud and trade relations with Iran? The risk that this could also happen with Russia is starting to become real. The western axis has hit Russia hard with a series of sanctions and trade bans that could also be reflected in the technology market. As Hong Kong-based law firm Seyfarth Shaw says, Chinese companies could find themselves together forced to block their market in Russia.
As stated, "fines could run into billions of dollars and penalties would include imprisonment and even penalties imposed directly on those companies that violate the sanctions if the violations are particularly severe". The reference is to those companies, Chinese and non-Chinese, which trade products made on the basis of American technologies, including semiconductors, but also smartphones, PCs and so on. And while Taiwan, South Korea and Japan have endorsed this decision, China has not yet spoken out about it. Although it would appear that Lenovo, as well as the American Apple, Dell and Intel, has already begun to suspend its activities in Russia.
Sanctions could strike again Huawei, which last year initiated 5G deals with MTS and Rostelecom, the largest telephone operators in Russia.
So far, China has shown itself "not in favor of the use of sanctions to solve problems and unilateral sanctions, which have no basis in international law“, As stated by the foreign ministry. It remains to be seen how the story will develop: Russia is an important technology market for China, including exports of computers, transmission equipment and vehicle components, all products that often contain US patents.
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