Shenzhen tech fair a window into how Chinese firms are reducing reliance on US, reaching out to Europe

Coco Feng

Americans were conspicuously absent at one of China’s biggest technology shows last week – the only real US presence was a delegation from the city of Houston, a sister city to Shenzhen, which hosted the event.

The reduced US presence at the China Hi-Tech Fair, which ran for five days through Sunday, was made up for elsewhere, with a record 44 foreign delegations attending from countries such as Russia, Iran and Hungary, including first time visitors from Austria and Sweden.

As is now the norm for such events in China, facial recognition screened registered visitors before they entered the exhibition, which covered 105,000 square metres (equivalent to 15 football fields).

The fair, which has a 20-year history and saw its first major US presence in 2007, showcased technologies at the centre of global cutthroat competition amid an ongoing trade war between China and the US, including semiconductors, 5G and AI.

Washington has used national security and human rights concerns as reasons to curtail China's access to American technology, by placing Chinese tech giants like Huawei, Hikvision and SenseTime on its Entity List which bans them from purchasing US products without permission.

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It was not surprising, then, to hear Chinese companies at the fair talk up solutions to help reduce reliance on US technology, while extending a welcome mat to the new European suppliers attending the event.

Chinese telecoms giant Huawei Technologies promoted its cloud service in partnership with Kingdee, a major enterprise cloud provider in China.

Kingdee Cloud Cosmic, catering to large enterprises, has been moving to Huawei’s cloud from Amazon’s AWS after the Chinese companies signed a strategic partnership last year, according to Kingdee employees at the booth, who spoke on condition of anonymity due to company policy on speaking to the media.

The product remains compatible with AWS but when marketing the service Kingdee will prioritise Huawei, said one of the employees, who added that it was part of an overall trend to reduce reliance on US suppliers.

Although Kingdee has not been put on the trade blacklist, another employee at the booth said: “It’s a trade war, you don't know if one day you'll be [blacklisted].”

ZTE, the Shenzhen-based telecoms supplier which was slapped with similar US sanctions for nearly three months in 2018, displayed its in-house operating system, NewStart, that can replace Microsoft’s Windows on laptops, according to an employee at the booth. ZTE also showcased semiconductors that were developed internally as substitutes for chips from Intel, but a ZTE employee admitted its devices lagged behind those of the US tech giant.

ZTE began its own research into chips years before the current trade friction but now the entire industry is trying to shift to local suppliers, the employee said.

Audrey Duan, president of the Houston Shenzhen Sister City Association, said that given sensitivities involving technology, the group’s focus this year was on cultural and economic exchanges. The only Houston company at the booth was marketing wool products.

The Huawei booth at the China Hi-Tech Fair 2019. Photo: Coco Feng

US-China trade tensions have “obviously” created opportunities for European countries to boost their collaboration with China, said Philipp Agathonos, director of the Beijing office of Austria’s Office for Science and Technology.

Laurent Renard, CEO and founder of Phoenix AI, an image processing firm in Belgium, said that facial recognition was “the main trend” in China but in his own country, it was effectively banned. Currently, around one third of the company's turnover is from China and he would like to further expand in the mainland Chinese market.

In a conference session on Wednesday, economist Michele Geraci called for more Sino-European cooperation, especially in digital payments and e-commerce. The former undersecretary at Italy’s Ministry of Economic Development was a key proponent of Italy’s entry into China's Belt and Road infrastructure programme.

However, some European representatives complained about regulatory and cultural barriers when doing business in China. For example, medical equipment firms wanting to launching their products in China have to go through an overly complex process where they have to select an agent or form a joint venture, said Lixia Xing, deputy head of business development for United Investment Europe SA, which operates the China Belgium Technology Centre in Belgium.

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