Hello everyone, this is Akito from Singapore.
In the mid-1980s, when I was a child, my family moved from Japan to Europe for my father’s work. This was in the midst of the cold war, and I remember vividly that the Japan Airlines flight we took to Europe went via Anchorage, Alaska. However, when we returned to Japan a few years later, our plane flew over the Soviet Union as tensions were easing.
About 20 years later, I was in Silicon Valley as a Nikkei reporter and globalisation was advancing at a breathtaking pace. Entrepreneurs flocked to the area from around the world, including China and Russia, while US venture capitalists started investing in Chinese tech companies. Around the same time, American tech companies began using China as a major production base. Looking back, those were the “good old days”, when the distance between markets was shrinking rapidly.
“In the long history of international relations, the ‘good old days’ you experienced in the Valley are rare,” a former diplomat here in Singapore told me a few months back. He pointed to past examples of conflict between powerful nations, such as second world war and the cold war.
Unfortunately, he also had a current example: the growing tensions between the US and China.
Tangled up in tech
Those tensions are raising tough questions for US tech companies. Many of them still depend on China for much of their sales, write Nikkei staff writers Akito Tanaka and Grace Li.
An analysis of financial data by Nikkei Asia shows that of the top 100 global companies in China by sales in the most recent fiscal year, 17 were US tech-related companies.
Apple topped the list, while Qualcomm, a major US chip company, depends on China for more than 60 per cent of its sales. Electric-car maker Tesla relies on China for over 20 per cent of its sales.
This dependence on China has changed little despite efforts at decoupling the two countries’ tech supply chains. Greater China remains Apple’s second-largest source of revenue, following the company’s home market. For Tesla, China’s importance has grown by leaps and bounds. In 2022 it made 22 per cent of its total sales in the country, up from 8 per cent in 2018.
Like the former diplomat who sees tension as more common than harmony in the global order, many analysts expect the US-China conflict to continue. Leaders of US tech companies whose strategy has been to court the Chinese market will have to “accept that a new status quo is forming”, according to one such expert.
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New rules for new tech
China plans to tighten its rules governing artificial intelligence as Beijing seeks to strike a balance between encouraging developers to advance the technology and a desire to control content, writes the Financial Times’ Qianer Liu.
The Cyberspace Administration of China, the powerful internet watchdog, aims to introduce measures that will require companies to obtain approval before they release generative AI products, said people close to the regulators.
The update is part of regulations to be finalised as early as this month, according to people with knowledge of the move.
It contrasts with draft regulations issued in April that gave tech companies 10 working days to register their products once they had launched them. That document demands companies train their generative AI models with “veracity, accuracy, objectivity and diversity” and makes them almost fully responsible for the content their AI creates.
The latest move in China’s AI regulatory regime signals how the government is struggling to reconcile a desire to develop world-beating technologies with its longstanding censorship regime.
Beijing is keen to formalise its regulatory approach to generative AI before the technology — which can quickly create humanlike text, images and other content in response to simple prompts — becomes widespread.
An eye for AI
China’s artificial intelligence boom is proving a strong pull for US companies, even as the two countries engage in tit-for-tat trade restrictions on tech-related goods and materials.
The recent World Artificial Intelligence Conference in Shanghai drew executives from Tesla, Microsoft and other big American companies looking to tap the country’s emerging AI market, write Nikkei staff writers Tomoko Wakasugi and Shunsuke Tabeta.
“I think there’s an immense number of very smart, very talented people in China,” Tesla CEO Elon Musk said in a video message at the event. Google had a booth at the venue — despite its services being blocked in China — while executives from Microsoft appeared on stage.
US tech has its sights set on China despite the souring relationship between Washington and Beijing because of the potential scale of its AI market, which market researcher IDC forecasts to more than double between 2022 and 2026 to $26.4bn.
Channelling Asia
Netflix co-founder Reed Hastings once said in an interview with Nikkei that one of his favourite series is Midnight Diner, a show based on a Japanese manga.
Now, the company is investing heavily to create new content in Asian markets like South Korea, Japan and India, recruiting new partners and searching for emerging talent to capture audiences in the increasingly important region, write Nikkei staff writers Rei Nakafuji and Kotaro Hosokawa.
Netflix co-CEO Ted Sarandos visited Seoul last month and met with production company executives and creators as part of the trip. The company signed a five-year contract with Yuji Sakamoto, who won best screenplay for the film Kaibutsu (Monster) at this year’s Cannes Film Festival.
In India, Netflix signed a multiyear contract with director Hansal Mehta following the success of his crime drama Scoop
Netflix’s Asia push comes as the platform faces cut-throat competition at home, slowing growth. Revenue increased about 4 per cent on the year to $8.16bn in January-March, falling short of market expectations. Net profit dropped 18 per cent to $1.31bn.
Suggested reads
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Foxconn withdraws from $19.5bn chip JV with India’s Vedanta (Nikkei Asia)
Apple’s headset headache: the tiny and costly displays inside the Vision Pro (FT)
Huawei unveils latest AI model as ChatGPT boom rolls on (Nikkei Asia)
Indian ride-hailing upstart BluSmart takes on Uber with electric cars (FT)
Japan to give $530mn for new Sumco silicon wafer plants at home (Nikkei Asia)
Shenzhen, China’s ‘city of young migrants,’ at point of inflection (Nikkei Asia)
Ant Group launches $6bn buyback after regulatory crackdown ends (FT)
Byju’s taught a lesson by investors unhappy with online learning group (FT)
Sony dives into ‘extended reality’ with $2bn R&D war chest (Nikkei Asia)
#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.
Sign up here at Nikkei Asia to receive #techAsia each week. The editorial team can be reached at techasia@nex.nikkei.co.jp.
Source: Economy - ft.com
