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Global Economy

US targeting Tencent and Alibaba

The US government is taking a close look at online marketplaces operated by Chinese tech giants Alibaba and Tencent. It's about possible brand piracy and/or copyright infringement, said the office of the trade representative USTR, the US Trade Representative's Office. The platforms, including for the first time Aliexpress and the online trading offer from WeChat, would be added to a watch list.

Reputational damage in the US

According to USTR, this now includes 42 online platforms and 35 physical markets. These include Chinese online marketplaces Baidu Wangpan, DHGate, Pinduoduo, and Taobao, among others, as well as nine physical marketplaces located within China known for manufacturing, distributing and selling counterfeit goods, the USTR further said. Inclusion on the watch list does not result in sanctions, but it is likely to cause reputational damage.

US industry associations such as the American Apparel and Footwear Association (AAFA) and the Motion Picture Association, the association of major US film production companies, welcomed the US government's actions. The technology group Tencent criticized the decision, but promised to cooperate with the authority to clarify the matter. Tencent itself pursues copyright infringements on its platforms. Alibaba also assured to work with the authorities.

"Challenging Operating Environment" in China

The world's two largest economies, the USA and China, have been at odds over trade issues such as tariffs, technologies and patents for years. And for US technology or social media companies, it is difficult to successfully operate the usual business model in China.

Microsoft closed the social media platform LinkedIn last year and replaced it with a pure job exchange. The reason: The strict Chinese regulation ensures a "challenging operating environment". Facebook and Twitter were banned from China more than a decade ago, and Google withdrew in 2010. The online retailer Amazon is available in China, but was never able to assert itself against Chinese providers such as Alibaba or JD.com.

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