Alex Feinberg, Director of Partnerships at OKcoin, explains why the global trade war could hamper American innovation.
Alex Feinberg, Director of Partnerships OKcoin and TechRepublic's Dan Patterson talk global trade-wars and the potential impact on both U.S. and Chinese tech businesses. The following is an edited transcript of the interview.
Dan Patterson: This trade war is kind of new for all of us. We're wrapping our heads around all sorts of industries, but China is one of fastest growing— not just economies— but technology-powered economies. How could this trade war potentially impact the Chinese technology industry and the American economy?
Alex Feinberg: What we've seen over the last few months, with retaliatory action taken by both sides, is a potential slow down in terms of the commerce that can happen between the two countries. A couple of months ago, there was legislation put forth that made the procurement of ZTE products more challenging. We basically put significant impediments towards allowing them to continue their business operations. We've also blocked a proposed merger between Broadcom, based in Singapore, and Qualcomm, based in the United States.
We're seeing the United States viewing some sorts of activities happening between not just Chinese companies, but companies that have relationships with Chinese companies, like Broadcom and American counterparts, as potentially adversary to the long-term interests of the United States.
SEE: Wireless networking policy (Tech Pro Research)
As it stands, it's just going to have a tremendous broad-reaching impact for the American consumer, the American employee. It's far too early to tell, but if we extrapolate recent events and project out what they could mean in the next six months, 12 months, 18 months, you could certainly find yourself in a climate where receiving Chinese investment capital is more challenging.
Last year, when Snapchat stock was going sideways, or downwards, they received a strategic investment from Tencent, the owner of WeChat, one of the largest messaging applications in the world. What happens if in 2019, the Trump Administration decides that communications is a strategic vertical that needs to be controlled? All of a sudden, Snapchat, with their American executives, might not be able to accept such a strategic investment from a Chinese company and that would obviously negatively impact their employees, shareholders, potentially users and potentially benefit the rest of United States with essentially fire walling an American company from more Chinese influence.
Dan Patterson: Could this potentially also impact US innovation, given what you just said about the challenges that we might see in Chinese investment? Could we see small startups that are truly innovative, reach a wall and simply be unable to scale?
Alex Feinberg: I think it's certainly possible. I haven't encountered a ton of information relating to H1B Visa Programs, as it relates to a trade war, but if you dig into some of the claims of the United States has made against China with respect to IP infringement.
SEE: 5G mobile networks: A cheat sheet (TechRepublic)
You can expect the higher ups in the United States government believe the Chinese government is placing Chinese nationals at American tech-firms to then steal some IP and relay it back to China. Now, if our government believes this to be the case, the most logical move for our government, would then be to restrict the amount of H1B Visas that are available for nationals of certain jurisdictions.
Now, we've certainly put it on the table to introduce travel bans for people from particular regions, if we can't establish the fact that they are not, in fact, representing terrorist organizations. Now, if you think that that type of ban can extend forward or extend further, the natural and next step would be to go after H1B Visas, which would make it more challenging for domestic corporations to hire engineers or hire engineers at low price which could potentially put a stranglehold around innovation. If you can't bring in that rock-star engineer from Shanghai who you've been interviewing for the last six weeks, because you can't get him a visa, yeah, that can certainly put a damper on innovation.
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