China under scrutiny and a message from Omaha

Hello everyone, this is Akito in Singapore.

As the impact of US-China decoupling spreads, the presence of leading companies from both countries has grown exceptionally here in Singapore. The city-state is home to the Asia-Pacific headquarters of many American tech giants, while their Chinese counterparts have significant operations here, too.

For global companies, Singapore seems to have it all: English and Chinese are both widely used as official languages here, the crime rate is one of the lowest in the world, and Changi Airport, one of the most efficient and connected in Asia, is less than 30 minutes from the city centre. And most importantly, Singapore has a highly educated talent pool.

As tensions between the world’s two biggest economies worsen, Singapore provides a space where companies from both sides can launch their Asia-Pacific and global expansions.

But geopolitical concerns are never far away. That can be seen in the case of Chinese fast fashion brand Shein, which has an operating company based in Singapore but is facing increasing pressure in the US

Shein under scrutiny

Shein, the fast-growing and low-priced apparel brand popular among young shoppers, is eyeing an initial public offering in the US However, a bipartisan group of American lawmakers has sent a letter to the Securities and Exchange Commission urging it to block the IPO until the company can prove it is not using forced labour in China’s Xinjiang region, write Nikkei’s Rintaro Tobita and Tomoko Wakasugi.

The Uyghur Forced Labor Prevention Act, which took effect in the US last June, essentially bans imports of products made in Xinjiang.

Although Shein has said it requires suppliers to buy cotton from approved regions to comply with the legislation, the bipartisan US-China Economic and Security Review Commission (USCC) recently released a report detailing allegations about forced labour as well as violation of intellectual property rights.

Temu, an ecommerce platform run by PDD Holdings, operator of China’s popular Pinduoduo, has also come under American scrutiny. The company announced in a recent filing that PDD has relocated its headquarters from Shanghai to Dublin as it plans to ramp up its expansion outside China.

But regardless of where their headquarters may be located, US scrutiny of Chinese companies is unlikely to let up anytime soon.

Moving towards market

A top Chinese memory chipmaker is going forward with a listing in Shanghai that will fund significant expansion, after receiving confirmation from US chip toolmakers they can supply its new production lines, write the Financial Times’ Qianer Liu, Cheng Leng, Eleanor Olcott and Demetri Sevastopulo.

Months after Washington imposed a sweeping export ban over advanced chipmaking tools, ChangXin Memory Technologies has been told the equipment it needs will not be subject to US controls, according to people with direct knowledge of the matter.

CXMT, one of China’s biggest makers of DRam memory chips, has resumed expansion plans for foundries that it previously put on hold due to the US export controls. The new plants will manufacture less sophisticated chips for phones, servers and electric vehicles, bypassing the tightened restrictions over procuring advanced chip tools.

To fund this expansion, it plans an IPO on Shanghai’s tech-focused Star board and is in consultation with at least two possible underwriters for the listing, including Chinese bank CICC, according to three people with knowledge of the matter. CXMT and CICC did not respond to requests for comment.

EV squeeze

Drivers in China have been quick to embrace electric vehicles, helped along by government incentives and plenty of models to choose from. But a crowded market has set the stage for a brutal price war, writes Nikkei Asia’s CK Tan.

From around 200 EV makers today, some in the industry predict that less than a dozen will be left in a few years’ time as intense price pressure forces smaller players and those without deep-pocketed backers out of business.

Consumer expectations of further price cuts risk exacerbating the pain for automakers. Shenzhen property agent Amy Liu, who is looking to trade in her 5-year-old electric SUV, says she will shop around for a bit longer. “I will wait it out for the best deal.”

The Oracle speaks

Warren Buffett, chair and CEO of Berkshire Hathaway, was full of enthusiasm for Japan at his investment company’s recent annual meeting in Omaha, Nebraska, writes Nikkei Asia chief business news correspondent Kenji Kawase.

At the event, Buffett was joined on stage by his longtime business partner, Charlie Munger, for a five-hour discussion covering investing, economics and geopolitics. The 92-year-old billionaire, known as the “Oracle of Omaha,” also touched on the move that surprised many observers late last year: selling the bulk of Berkshire’s stake in Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker.

TSMC is “one of the best managed and most important companies in the world,” Buffett said, but the abrupt about-face was made “in light of the situation”, likely a reference to tensions across the Taiwan Strait.

Buffett had much more to say about Berkshire’s holdings in Japan’s five trading houses: Mitsubishi, Sumitomo, Mitsui and Co, Itochu and Marubeni. He lauded all five companies “really wonderful partners”, pointing to their “very, very substantial” operations, handsome dividend payments and share buybacks.

His appetite for Japan, it appears, is not yet sated. “We’re not done,” he told his audience in Omaha.

While Buffett talked up Japan, the 99-year-old Munger had strong words for the world’s two biggest economies, saying he blames both the US and China for the current economic tensions. The situation was “wrongly created on both sides”, he said. “We are equally guilty of being stupid.”

Suggested reads

1. Vietnam wants Facebook, YouTube, TikTok users to verify identities (Nikkei Asia)

2. LinkedIn to close China jobs service and cites strong competition (FT)

3. FT Magazine: TikTok spied on me. Why? (FT)

4. China’s BYD expands beyond iPads, to produce EVs in Vietnam (Nikkei Asia)

5. Japan’s ‘myth of security’ raises cyber attack risk (FT)

6. Japanese chip-tester makers bet big on 3D, EV devices (Nikkei Asia)

7. Refurbished iPhones boost Apple’s share of Indian market (FT)

8. South-east Asia’s space race chases wins in tourism, communications (Nikkei Asia)

9. Singapore taps HSBC, Citi for rigid money laundering controls (Nikkei Asia)

10. ‘Driverless’ bullet trains to debut at Japan’s JR East in 2030s (Nikkei Asia)

#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.

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