As U.S. companies in China struggle, will Musk’s charm offensive work?

Political tensions between the U.S. and China have made Life difficult for U.S. companies in China as well. tesla founder Musk has not only publicly clarified that his electric cars do not engage in espionage, but also praised Chinese authorities for their policy to reduce carbon emissions. However, observers point out that Musk’s goodwill towards China does not necessarily mean that the Chinese authorities will “turn the other cheek”.

Musk: Tesla not spying

Musk, chief executive of Tesla, China’s largest U.S.-owned car maker, said in a recent interview with CCTV that he was impressed by the carbon emissions targets set in China’s 14th Five-Year Plan and that he was confident that China’s future would be bright and prosperous.

Musk’s praise for China is thought to be directly related to Tesla Motors’ recent troubles in the country. Musk hopes his charm offensive for China will ease and eliminate China’s concerns that Tesla’s cars could pose a safety risk.

The Wall Street Journal recently reported that Chinese authorities are restricting the use of Tesla cars by military personnel and personnel of important state-owned enterprises because of data and information allegedly recorded by Tesla cars’ built-in cameras that continuously record images of when and where the vehicles are used, as well as the contact lists of cell phones that are synchronized with the vehicles. China is concerned that certain data could be sent back to the United States, posing a threat to China’s national security.

Tesla vehicles are fitted with eight surround cameras, 12 ultrasound sensors and a front-facing millimeter wave radar to analyze and process information about the vehicle’s surroundings. Chinese officials say these sensors record visual images of the vehicle’s surrounding location.

In response to the negative news that could jeopardize Tesla’s operations and sales in China, Tesla founder Musk publicly clarified at the China Development High-Level Forum on March 20 that Tesla does not use wireless capabilities to extract any sensitive data, that Tesla does not collect sensitive or private data, that the data Tesla collects is not shared with the U.S. government and that Chinese users’ data is fully protected. He said that if Tesla had spied, the negative impact would have been significant and would have eventually led to the company’s collapse, which Tesla would not have done.

Expert: China won’t “let Musk off the hook”

Dr. Eric Zhang, a U.S. expert on China and author of “China’s Impending Collapse,” said in an interview with the Voice of America that Musk’s clarifications and assurances, and even his praise for China’s policies, may not result in the Chinese authorities “letting him off the hook.

I believe that Musk’s praise of China is an attempt to curry favor with Beijing in the hope that it will be lenient with him,” he said. I also believe that Musk is misguided. China will make life difficult for Tesla and eventually take away Tesla’s technology and shut down its operations in China.”

Zhang Xun, a U.S. international business investment consultant, told Voice of America that Musk is trying to compliment China with overtures so that he hopes China will give Tesla the benefit of the doubt and not repeat the boycott of Japanese cars in China in previous years.

I don’t think it’s likely (that Tesla will be given a pass) either,” he said. It’s probably wishful thinking on Musk’s part. Of course, if he’s willing to act as a propagandist for China, like a big foreign propagandist who goes around the U.S. promoting China, that might be a different story. But that’s not likely either. He would simply pay lip service to China’s achievements and show that he is bullish about China’s future development. The current political significance of such things is not something the Chinese authorities would care much about in the current political environment.”

Foreign companies risk having their money and technology stolen

Zhang Xun said the Chinese government has always had legal and political requirements for foreign companies in China, including U.S. companies, and if China and the United States were not too rigid in their political relations, the Chinese authorities could “turn a blind eye” to law enforcement and would be less likely to look into major or minor issues such as surveillance. But now China is becoming more and more assertive, and U.S. competitiveness appears fragile. As a result, U.S. companies are having a tough Time being caught in the middle of political tensions between the U.S. and China.

Business inevitably becomes a means, a puppet, a prop for the Chinese government to show that it can manipulate the West and control the world,” he said. In this case, China will not hesitate to demonstrate its control, and it’s hard for companies to do anything when they’re caught in the middle.”

Tesla, the world’s largest electric car manufacturer, signed an investment agreement with Shanghai in 2018 to build a factory, the first outside the U.S. and the first wholly U.S. owned car manufacturer in China. 2019 saw the first Tesla China vehicles roll off the production line. By the end of last year, Tesla had sold 147,000 vehicles in China, accounting for about 30 percent of its total global sales.

Zhang said China is indeed a huge market for big U.S. companies, but China’s long-term goal in bringing in foreign investment is never to let foreign companies take China’s market share, but to take away foreign companies’ money and technology.

China’s ruler, Xi Jinping, doesn’t agree that in the long run foreign companies should really have a place in China,” he said. He wants their money and technology, but he doesn’t want to give them long-term market share in China. He wants to replace them, to replace Musk. Five or 10 years from now, Musk will regret that China has ruined Tesla.”

Zhang also said that in the short term, U.S. companies operating in China may make money, but in the long term, they will be driven out of the country. So if they’re smart, they might as well leave China before their technology is stolen.

American values vs. Censorship by Chinese Authorities

This is not the first time that U.S. companies have encountered challenges and problems with their operations in China. in January 2010, the U.S. search engine company Google claimed that Google’s search engine had been hacked by Chinese Hackers who may have had an official background. Google also stated that it had long been required by Chinese authorities to cooperate with censorship. Google announced in March that year that it was withdrawing from the mainland Chinese market after failing to agree with and accept the censorship demands of the Chinese authorities.

Zhang Jiadun said that in the long run, it is impossible for U.S. companies to strike a balance between defending American values and making money from corporate profits, while at the same time having to listen to the Chinese authorities’ controls and censorship.

In 2014, Chinese authorities banned the installation of Microsoft’s Windows 8 system on all computers in government departments, citing the potential for national information security.

China’s Cybersecurity Law, which came into effect in 2017, requires that information and data collected and generated in China by critical information infrastructure operators must be stored in China. Apple has had to comply with China’s cybersecurity law by migrating data stored in iCloud for users in mainland China to servers of the company Guizhou on the Cloud starting in February 2018.

Facebook is a popular social media platform worldwide. On October 22, 2014, Zuckerberg gave a speech in Chinese at Tsinghua University’s School of Management, praising China’s long history and Culture and expressing his determination and persistence that he and Facebook can change the world if they continue to work hard. He expressed his determination and insistence that Facebook can change the world if they continue to work hard.

“Wishful thinking” and “not my kind of people”

But Zhang Xun, a U.S. international business investment consultant, told Voice of America that Zuckerberg’s efforts to please China have not opened the door for Facebook to enter the country.

The Chinese authorities’ refusal to allow Facebook to enter China is more about social stability and controlling public opinion,” he said. Because when social media platforms enter China, it is inevitable that the authorities will cause some difficulty in controlling public opinion within China. In this case, even if the U.S. company submits to Chinese values, the authorities are not willing to let you in.”

Zhang Xun said the Chinese authorities have a “if it’s not me, it’s different” mentality toward foreign companies operating in China. At a time of political tension between the U.S. and China, Chinese authorities are tightening their grip on U.S. companies, a different time and place than when Tesla invested in a factory in Shanghai in 2019. At that time, Chinese authorities did not have any security concerns about Tesla’s cars, but time has changed and Chinese authorities’ controls are changing, becoming more and more difficult for U.S. companies (operating in China).

The tensions in U.S.-China relations that have emerged during the Trump administration since the Biden administration took office did not improve with the March 18 meeting between the two countries’ top diplomats in Anchorage, where the two sides exchanged tit-for-tat and war of words from the start of the talks. The two days of talks yielded no substantive results.

Observers say the prospects for future improvement in U.S.-China relations are not promising given the unhappy breakup of the first meeting between top U.S. and Chinese officials since the Biden Administration took office. Tensions in the political relationship between the two countries are bound to continue to be projected onto the economic and trade front as well.

U.S. China expert Gordon Zhang said the future business environment in China is not promising for U.S. companies and could become increasingly worrisome.

U.S. companies are getting out while they can, because it’s clear where China is pointing in the future,” he said. There may be some sort of temporary relaxation of the Chinese regime in some areas, but China has made clear their goal, which is that there is no room for foreign companies, especially U.S. companies, in a state-run economy where the Communist Party is in absolute control.”