China Sanctions Backfire, Bringing Unexpected Benefits... European Companies Growing Uneasy

Alibaba Financial Subsidiary Pursues Listing in Shanghai and Hong Kong Instead of New York
Nokia, Ericsson, and Other European Firms Concerned About Possible Chinese Retaliatory Sanctions

[Image source=AP Yonhap News]

[Asia Economy Reporter Park Sun-mi] Amid ongoing sanctions by the United States and European countries against China over the implementation of the Hong Kong National Security Law and the spread of COVID-19, signs are emerging that the sanctioning parties may suffer greater backlash.

According to the Wall Street Journal (WSJ) on the 21st, Alibaba's financial subsidiary Ant Group (formerly Ant Financial), China's largest e-commerce company, is planning a simultaneous listing on the Shanghai and Hong Kong stock exchanges, bypassing the New York market.

Ant Group operates 'Alipay,' a mobile payment system with over 900 million users worldwide, and is considered the most valuable fintech company globally. Global investment banks estimate Ant Group's corporate value to exceed $200 billion (approximately 240 trillion KRW).

While it has been common for large Chinese corporations or advanced technology companies to choose New York for smooth fundraising, many companies are now using mainland China and Hong Kong stock markets as alternatives instead of New York, as the recent U.S. administration pushes additional measures to regulate Chinese companies' access to U.S. capital markets amid conflicts with China.

SMIC, China's largest foundry (semiconductor contract manufacturer), also voluntarily delisted from the Nasdaq stock exchange in New York last May amid the U.S.-China trade and technology war atmosphere, and successfully listed on the Shanghai Stock Exchange on the 16th. On its first day of listing, SMIC's stock price soared to more than three times its initial public offering price.

Many Chinese companies listed on the New York Stock Exchange are considering returning to mainland China or the Hong Kong stock markets, so if U.S. sanctions against China continue for the time being, the boom in the Chinese and Hong Kong stock markets is expected to persist.

European Union (EU) countries, which have joined the U.S. in sanctioning Chinese telecommunications equipment company Huawei, are also trembling with anxiety, fearing backlash.

According to WSJ, China's Ministry of Commerce is reviewing export control measures against European telecommunications equipment manufacturers Nokia and Ericsson.

As the UK decided on the 14th to stop purchasing Huawei equipment for its 5G construction project, and with the EU countries joining in sanctions, China is preparing retaliatory measures against European companies. The Chinese Ministry of Commerce has warned of retaliation, stating it will take necessary actions to protect the legitimate rights of Chinese companies in response to the UK's exclusion of Huawei. If China's sanctions against European telecommunications equipment companies materialize, economic damage to these companies will be inevitable. Currently, Nokia operates one factory and employs 16,000 people in the Greater China region, including Hong Kong and Taiwan, while Ericsson has one manufacturing facility and multiple research and development centers in China.

This content was produced with the assistance of AI translation services.