The Huawei ban shook many who believed the US-China trade war was all bark and no bite and the US government took a formal step into the fray, limiting the global reach of Huawei devices. This put the entire relationship between American economy and Chinese products under scrutiny. Johnson Zhu, communications manager at Elephant Robotics looks at effects of this action.

Huawei was under the protective wing of the Chinese government since 1987. When it was ready to fly on its own and compete with Samsung and Apple on a global scale, the government sold their shares back. Whether earned or not, talk of such a close association with the Chinese government paired with their phenomenal growth and success around the globe made Huawei an easy target for US government action.

What many don’t know is that not all front-page Chinese companies had government’s support. Take DJI, a high-ticket drone, born and bred in Shenzhen. Its founder started the company in his dorm room and survived on Ramen noodles, like many of us did in college. Today, it accounts for 74% of global drone sales. It easily overtook the US startup Airwave that burned through $118-million of VC funding and shut down, the ill-famed Lily drone that never got to take off, despite $3-million of pre-orders, or 3D Robotics.

DJI opens the door for new companies that bring the cool factor through their own innovation power and surpass the ill-famed copy-cat label they’ve long outgrown. If the US government wants to block the use of DJI drones it’ll have to take a completely new approach as it’s a very different beast than Huawei.

Yet, the critical segment, by far, is the Chinese wave of new competitive tech, getting the least media attention. These companies are at the heart of some of the most competitive solutions for us here in the US. They provide machines, software, and supply chain solutions and their accelerated time schedule has seen them become a solid threat quicker than anyone could predict. And they don’t show signs of slowing down or let their American or European peers catch up.

The US Department of Commerce targeted 14 industries for tariff increases (biotech, AI, quantum computing, etc.) to put a threshold on these emerging technologies’ rise. But it’s not as simple as blocking Chinese companies and allowing American ones to flourish in their place.

Robotics: A curious case of tech photosynthesis

The true ripple effects of any action towards these hundreds of smaller companies will be felt strongly by the American public. If we look at one of these categories, robotics, we see a curious case of tech photosynthesis.

Elephant Robotics is one of many hardware success stories to come from the Silicon Valley of China, Shenzhen. Only three years old, they already receive half of their orders from manufacturers outside of China. They make robotic arms that and compete with larger, and better-established companies from Europe and the USA.

Through comparison, we can look at Rethink Robotics, that has operated in Germany since 2008, making similar human companion arms, or Barrett Technology Inc., from Cambridge, with even longer exposure to the American market, operating since 1988 and that gained some high accolades. Even California’s Willow Garage, founded by a former Google employee, a trusted name supporting software and hardware solutions since 2006 was outpaced by younger Chinese competition.

Elephant Robotics has already found success selling to Europe and America. The Shenzhen-based manufacturer’s competitive advantage in the robotic arm market is thanks to vertically integrated research and development, rapid learning processes, highly competitive pricing and, ultimately, great quality products. Besides the expected price advantage, they are helping small factories gain solid time and cost savings. The partial automation gives them a leg up in their cut throat industries that otherwise would’ve let them bleed out in the face of a fierce competition.

But this should not be seen as an “us versus them” trade war with mutually exclusive paths to economic growth. Companies like Elephant Robotics are currently helping to develop small farms, construction companies and laboratories in the US and are key to so many other industries.

The vast majority of small and medium sized businesses in America will rely on services from these 14 targeted industries the Department of Commerce has identified for their survival. Attempting to ban the swarm of Chinese tech companies will only lead them to turn their course towards cooperating and developing further European and Asian economies. America will be left on its own to match the speed and vertical integration advantages Chinese firms would be offering the rest of the world.

American manufacturers should be looking to use Chinese niche tech products to tilt the playing field to their advantage in bettering their own domestic client base.  At the end of the day, strategic partnerships satisfy all parties that are interested in a peaceful resolution and changing the economics of any ongoing trade war.

Note: This opinion pieces was written at end June 2019.

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