Legal experts said: The latest additions to China's list of controlled technology exports could upset a wide range of industries, and increase the likelihood that some global tech giants will have to split their Chinese operations.
The new list of export-controlled technologies - announced on August
28 - came as an unwelcome surprise for an industry already grappling with the
uncertainty posed by trade tensions between China and the United States.
The move was initially seen as a way to give Beijing an opinion on
any sale of the short video-sharing app TikTok, but advisers to Chinese and
foreign companies say the potential consequences go much further.
"The rules were a surprise to many in the market, and there is a
lot of tension in the tech sphere at the moment," said Alex Roberts - a
corporate consultant at Linklaters law firm in Shanghai.
In addition to recommendation algorithms such as those used by
ByteDance-owned TikTok, the new list of "partially restricted
exports" includes drones technology, cybersecurity, voice recognition
software, and handwriting scanning software.
Companies seeking to export these technologies must first pass
reviews and obtain approvals from the Chinese Ministry of Commerce and the
Ministry of Science and Technology.
The reviews could also affect a host of multinational companies
conducting research and development within China, adds Nicholas Bahmaniar, a
cybersecurity consultant at LEAF law firm in Beijing.
“It is very likely that a company with R&D centers in China will
face a choice between keeping its R&D center in China, only to China, or
leaving China so that they can use the technology they develop anywhere in the
world,” said Nicholas.
The Commerce Department was quick to respond to speculation that the
new rules were mainly targeting TikTok, saying that they were not targeting any
single company.
Lawyers who have taken a closer look at the changes say: Their wide
scope means they can reach a wide range of companies across different business
sectors.
The changes could change the minds of companies such as Microsoft, DJI drones, video streaming service Zoom and Tencent, which exports games to all parts of the world and has a rapidly growing cloud service business overseas.
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