Popular app, used for messaging, payments, called vital for doing business in China
By Liza Lin
SINGAPORE -- U.S. businesses in China are pushing back against a looming Trump administration ban on Tencent Holdings' WeChat app, with a report Wednesday shedding light on just how vital the tool is to companies doing business in the world's second-largest economy.
The American Chamber of Commerce in Shanghai warned of an "enormous negative impact" on U.S. companies with international businesses if the order, whose scope has yet to be revealed, was enacted too broadly.
The Chinese app, a ubiquitous chat messaging and commercial platform, has come under the spotlight as technology increasingly takes center stage in a confrontation between the world's two major economies. On Aug. 6, President Trump issued an executive order banning U.S. individuals and firms from transactions involving WeChat, to be effective from late September, citing concerns over national security. The order has rattled American firms, concerned that the ban could be applied beyond the U.S. and in China.
AmCham Shanghai, which includes firms such as Coca-Cola Co. and JP Morgan Chase & Co. among its 1,400 members, surveyed more than 140 corporates this month.
Should the ban extend to China and U.S. companies and citizens there, almost nine in 10 companies said the ban would hurt operations in China by hindering their ability to effectively communicate with staff and local authorities. More than half of those polled said it would result in a loss of competitiveness in the market, and 42% of the respondents say extending the WeChat ban to China would result in revenue loss.
More than a dozen firms, including Apple Inc., Walmart Inc. and Ford Motor Co., have approached the White House in recent weeks to voice their concerns that the order, typically used in emergency situations to protect national security, could extend into China, where the app has become a vital business tool.
WeChat, whose domestic and international versions are used by more than 1.2 billion people globally, is the most widely used app in China. Beyond interpersonal communication, consumers in China use the app to pay for goods and services, while companies including Starbucks Corp. and McDonald's Corp. use WeChat as a key marketing tool and e-commerce platform.
Tencent executives said on Aug. 12 that based on its analysis, the order would be limited to WeChat's international operations, but there has been no clarity from the Trump administration about its scope.
Tencent didn't immediately respond to a request for comment.
The AmCham Shanghai survey showed that the app is often used by U.S. businesses in China to communicate with staff, Chinese consumers and local government officials. Replies showed there was no good alternative to WeChat in China, should the platform be banned. Facebook Inc.'s eponymous messaging app, Instagram and Twitter are blocked in China and Facebook-owned WhatsApp chat messenger is sporadically unusable. There is no comparable Chinese alternative.
Other U.S. business chambers within China have also done member surveys, but AmCham Shanghai is the first to release poll findings publicly.
WeChat is seen as a necessity by the local government and Chinese authorities turn to the app when they seek to communicate with companies, the chamber said. It cited an example of how financial regulators often issued directives or window guidance to U.S. banks using the app, and how the chat messenger was critical for arranging meetings, as well as hosting functions that enable firms to make appointments for their business-license application and registration process.
U.S. logistics companies could also be put at a greater compliance risk, AmCham Shanghai added. China's logistics regulator uses WeChat to mandate daily temperature reporting during the coronavirus crisis. Without WeChat, U.S. logistics companies would be unable to comply with regulations, the advocacy group said.
In an increasingly cashless society such as China, losing the ability to take mobile payments using WeChat could also put firms at a competitive disadvantage, said Ker Gibbs, the president of AmCham Shanghai. "Customers who use WeChat will be reluctant to switch platforms and likely abandon U.S. products for their Chinese, European and other competitors," he said.
Write to Liza Lin at Liza.Lin@wsj.com