There Could Be ‘Complications’: China Calls Global Tech Giants In For Mafia-Style Sit-Down

Just so you understand, China isn’t “threatening” global technology heavyweights, per se.

Just like how, if you’re a connected guy and your capodecina calls you to lunch in the back of the local cold cuts shop and tells you that persisting in your current behavior could result in “problems”, isn’t necessarily a “threat”.

According to a pair of sources who spoke to Reuters on Sunday, Beijing called global technology heavyweights in for what sounds like a mafia-style sit down with Chinese officials last week, during which those firms were advised that complying further with the Trump administration’s Huawei ban could lead to “complications.”

One Microsoft representative said discussions with Chinese officials didn’t necessarily escalate to the level of “a direct warning”, but, as Reuters puts it, “it was made clear to the firm that complying with US bans would likely lead to further complications for all sector participants.”

Yes, US tech companies might run into “further complications”, should they continue to engage in behavior that undermines China’s corporate crown jewel. But, again, nobody should take that the wrong way. It’s not a threat, it’s just a friendly heads up.

Underscoring the entirely benign nature of these alleged discussions, the Microsoft representative said Beijing “asked” the company “not to make hasty or ill-considered moves before the situation was fully understood.”

The person described “the tone” as “conciliatory.” You’d be forgiven for chuckling.

The meetings, chaired by China’s central economic planning agency, the NDRC, and the Commerce ministry, were described on Saturday by the New York Times in foreboding terms.

“The Chinese government this past week summoned major tech companies including Microsoft and Dell from the United States and Samsung of South Korea, to warn that they could face dire consequences if they cooperate with the Trump administration’s ban on sales of key American technology to Chinese companies”, the Times said, adding that “the involvement of three government bodies suggested a high level of coordination and likely approval from the very top of China’s opaque leadership structure.”

The fact that this confab took place on Tuesday and Wednesday is notable for at least two reasons.

First, it means Beijing convened the chat just days after unveiling the “unreliable entities” list and launching an investigation into FedEx.

Second, it means these discussions flew largely under the radar for days before grabbing international headlines. That could mean the companies involved were asked not to comment. Indeed, the Times writes that the two sources who spoke out “asked not to be named because they… could face retribution.”

One source who spoke to Reuters seemed to suggest the talks weren’t, in fact, threatening at all. “No mentioning of Huawei. No ultimatums. Just asked to stay in the country, contribute to the win-win negotiation”, that person said, before delivering a somewhat disconcerting take on the longer-term outlook. “Self-sufficiency will take a long time [for China], and only after then they can kick [US tech and products] out”, the person remarked.

Separately, Steve Mnuchin said “if we move forward on trade, perhaps [Trump] would be willing to do certain things on Huawei if he gets comfort from China on that and certain guarantees.”

Perhaps.

Meanwhile, on Saturday, the infamous Hu Xijin was out with another one of his “based on what I know” tweets. “China is building a management mechanism to protect China’s key technologies”, the editor of the Global Times said. “This is a major step to improve its system, and also a move to counter US crackdown”, he went on to write. “Once taking effect, some technology exports to the US will be subject to the control.”

In an interview with CBS this week, Tim Cook expressed confidence that Apple would not be targeted by Beijing. “We’ve had a company in China for a long time and there is, I believe, a healthy level of respect for both sides, so I don’t anticipate that happening”, Cook said.

He quickly hedged. “But I’m not promising that it will not.”