Corporate China

Execs voice sympathy for Nokia, Microsoft, Tencent

PUBLISHED : Monday, 11 August, 2014, 6:55pm
UPDATED : Tuesday, 12 August, 2014, 6:24pm

The microblogging realm was filled with words of sympathy this past week at the woes for some of China's longest-serving foreign tech firms whose names have become household words over the last 20 years. Leading the list were a flood of comments on Nokia, whose name was once synonymous with cellphones in China but later fell on hard times and last week laid off a big part of its Chinese workforce. Meantime, other tech executives looked on in wonder at the recent plight of Microsoft (Nasdaq: MSFT) and Mercedes-Benz, which have joined a growing list of western firms being investigated by Chinese anti-trust regulators.

Chinese firms haven't been the only ones feel the pain these past few weeks, as the nation's Internet regulator has also cracked down on social media sites with its eye squarely on industry titan Tencent (0700.HK). As that happened, the operator of the popular WeChat and QQ instant messaging platforms got some rare sympathy from rival Weibo (Nasdaq: WB), the Chinese equivalent of Twitter, which itself came under a similar crackdown two years ago.

Summer is usually a quiet time in the business world as many people go on vacation, but these past few weeks have been anything but quiet for some of the biggest foreign tech names in China. Global software titan Microsoft has found itself at the center of two major negative stories, including a surprise anti-monopoly investigation that was revealed a couple of weeks ago. The company was back in the news last week, when it laid off a big portion of the workers it acquired with its purchase last year of the struggling former cellphone leader Nokia.

The Nokia layoffs made the biggest waves in the microblogging realm, as a wide range of tech executives reflected on the downfall of a company that in many ways helped to build China into the world's biggest mobile market. TCL (Shenzhen: 000100) Chairman Li Dongsheng was representative of the group, noting that the layoffs were inevitable as soon as Microsoft announced its acquisition. Li also sympathized more broadly with the plight of Nokia, which isn't hard to understand since TCL was also once China's homegrown cellphone superstar that later fell on hard times and has never really recovered its former glory.

Others commenting on the Nokia layoffs included executives from e-commerce leaders Alibaba and (Nasdaq: JD) and mobile carrier Unicom (0762.HK; NYSE: CHU), a big former Nokia customer, who all gave their own reflective thoughts. LinkedIn's (NYSE: LNKD) China chief Derek Shen also gave his words of sympathy, while conveniently also managing to promote his service that was giving special help to former Nokia employees in finding new jobs.  

But the Nokia layoffs were just one of the headaches for Microsoft, as it awaits the outcome of an anti-monopoly investigation that first burst into the headlines two weeks ago. That investigation was just the latest of a growing number of similar probes against foreign firms for anti-competitive behavior over the last year. In the tech realm Microsoft joined global cellphone chip giant Qualcomm (Nasdaq: QCOM) in being investigated, while luxury car maker Mercedes Benz also recently saw its offices raided as part of a similar probe. vice president Xu Lei commented on both the Microsoft and Mercedes probes, observing how Mercedes abruptly lowered the price of its after-sales replacement parts by an average of 15 per cent just before its offices were raided. He noted how the Mercedes actions came just days after Microsoft was warned not to interfere in the probe against it, and added that major foreign multinationals appeared to be entering an "autumn" period in China after a decade of rapid growth.

While many foreign tech firms have been feeling some pain in China these past few weeks, social networking leader Tencent was also feeling some heat from the nation's Internet regulators due to the huge influence of its QQ and WeChat mobile messaging services. The regulator last week rolled out new restrictions on both services, including one rule requiring owners of WeChat public accounts to register with their real names, and another limiting the posting of sensitive political content.

Longtime China Internet watchers will recall that Weibo, China's original social media superstar, came under a nearly identical crackdown around two years ago when that service was rapidly expanding and becoming a major force on the Internet. In a post on his microblog, Weibo senior editor Chen Tong expressed indirect words of sympathy for Tencent, commenting on how difficult it is to control the spread of rumors on a massive platform like Weibo that plays host to millions of messages each day.  

He also disclosed that Weibo has seven managers who do nothing but monitor the site for rumors, and they undoubtedly oversee many more in-house censors in policing Weibo to conform with China's strict censorship rules. Such is the difficult life in China's unpredictable high-tech environment, where both foreign and domestic companies must constantly expect the unexpected from unpredictable regulators in Beijing.

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