Why Many American Companies Can't Be Hurt by Trump's Trade War With China
The Trump administration has slapped 25% tariffs on $200 billion of Chinese products, an increase from 10%. China’s government said it would retaliate in kind. Many American companies look to China for much of their sales. Several of America’s largest public corporations, however, will not be hurt by the trade war. These are among the six largest.
Netflix operates in over 100 countries, but China is not one of them. One reason is that there are already entrenched streaming services in The People’s Republic. The biggest threat if Netflix were eventually to attempt to enter China is Youku, operated by e-commerce giant Alibaba. Netflix has been buying some Mandarin language content and planned to move into the market with streaming company iQiyi. The arrangement never got off the ground.
Alphabet’s Google tried to get a foothold in China in 2006. While it picked up some market share, China’s search business was always dominated by local operator Baidu. In 2010, a dispute over censorship and a hack into Google’s China servers effectively ended the American search company’s efforts. In 2018, Google management put together plans to reenter the world’s largest internet market. Google would need to censor some results to accomplish the comeback. Some Google employees became aware of the plan and raised very public protests. Google management backed down.
Costco is the fourth largest retailer in the United States. Its revenue last year was nearly $142 billion. It operates 772 warehouses and has over 96 million members who shop at these locations. Costco operates in 11 markets, led by the United States with 535 stores, Canada, Mexico, Japan and the United Kingdom. It does not have a single location in China. Costco is one of the very few big American retailers not among those closing the most stores.
Verizon’s wireline and wireless businesses operate almost completely in the United States. It is the second largest wireless company in America, with 153 million subscribers, just behind AT&T’s 156 million. Verizon’s landline broadband Fios is also among the largest companies in the sector, competing mostly against cable companies like Comcast and satellite operators like Dish Network. Verizon Media, which operates Yahoo and Huffington Post, has negligible revenue ties to China.
Bank of America has operations around the world, but its presence in China is very small, limited mostly to Merrill Lynch’s brokerage and asset management business, which operates out of a total of five offices, two of which are in Beijing and two of which are in Shanghai. Bank of America also operates a very small number of local branches there, and it has a modest currency hedging operation and corporate loan business.
Facebook tried to elbow its way into China in July 2018. It announced it would open Facebook Technology and use it as a hub for local startups. The New York Times reported that disputes with local authorities scuttled Facebook’s plans, primarily because the powerful Cyberspace Administration of China had not agreed to Facebook’s decision to run some of its operations out of Hong Kong. Moreover, Facebook is one of America’s most hated companies among consumers.