Trump Administration doubles down on WeChat ban, casting pall over US-China trade, observer says

By Hank Schultz contact

- Last updated on GMT

©Getty Images - serggn
©Getty Images - serggn

Related tags: Dietary supplement companies, Dietary supplement industry, Trade war

The Trump Administration’s attempt to prevent the use of the WeChat app within the United States has sent shock waves through that portion of the US dietary supplement industry involved with trade to and within China, an observer says.

Earlier this month the US Commerce Department moved to prevent US based cell phone users from downloading and using the popular Chinese enterprise and messaging software, claiming that the platform posed an immediate national security risk.  The move was immediately challenged in court, and Magistrate Judge Laurel Beeler in California agreed to delay the US restrictions, ruling that they would affect users’ First Amendment rights.

US renews call for immediate WeChat ban

But on Friday, the US Justice Department asked Beeler to issue an immediate ban​ that would remain in effect while the case works its way through court.  The Trump Administration has said that the Chinese government uses the app, and TikTok, a Chinese social media platform that has also been targeted, to gather information on US users that is used to advance its own interests.

The Justice Department filing claims there are about 19 million daily active users in the US, a number of whom are Chinese Americans who use the platform to stay connected with family back in mainland China. But the platform is far beyond just a messaging app, and within China itself is used for many business and personal finance functions.  In country users can employ the platform to buy products and services such as purchasing airline tickets.  It is even commonly used to pay utility bills.

And it has also become a key avenue for the marketing of dietary supplements, said Loren Israelsen, president of the United Natural Products Alliance, a Utah-based trade organization that has spent a lot of time in recent years building a bridge to mainland Chinese markets for US-based dietary supplement manufacturers.

“It’s a really important story,” Israelsen told NutraIngredients-USA.

Dating back to first days in office President Trump has embarked on a trade war with China.  A long list of products that included some supplement ingredients​ were subjected to tariffs.  The Chinese government responded in kind with a list of new tariffs of its own on US made goods.

WeChat ban could hamstring market entry efforts

Now that effort is extending into the social media platform realm, which could have grave implications for US supplement companies.  A number of supplement companies that do a significant amount of business in China, including Herbalife​ and Usana​, have migrated much of their business over to the WeChat platform in recent years.  Early views of the attempted WeChat ban were that it might not have much of an effect​.  But Israelsen was of the view that not being able to use the software at corporate headquarters in the US could greatly complicate the efforts of US-based companies to integrate into the Chinese market.

“We find in an extremely efficient platform to work from,” Israelsen said. “I would say it’s fair to say that the move to block downloads sent a shock wave through the Chinese American community,” ​he said.

“For most Americans the issue is irrelevant.  It’s remote.  For the supplement industry with no use of WeChat domestically it would make things difficult.  Any company anywhere in teh worlds that wants to do business in China would naturally have to adapt to business practices there and becoming proficient with WeChat would be a big part of that,”​ Israelsen observed.

Israelsen said there are some legitimate concerns about how foreign based social media platforms are integrated into American society.

“The issue with WeChat is that it is not seen as being secure and a number of industries wouldn’t use it for that reason alone.  But the dietary supplement industry is not generally engaged in politically sensitive activities,” ​he said.

Tool of strict social control

Israelsen acknowledged that part of the issue with using the WeChat platform, part of the stigma it bears so to speak, concerns how it is employed within China to keep public debate within accepted boundaries and to identify and punish transgressors.

“The Chinese system is itself designed in all aspects of life to have more control over its citizenry and WeChat is a tool in that control,” ​Israelsen said. “On the other hand, they look at the US, at all of the chaos and some of the nonsense on social media, and they say they very much don’t want that.”

New president, new policies

Israelsen said the November elections could upend the story.  At the moment Democratic Party challenger Joe Biden enjoys a lead in most polls.

“On the US side there are some legitimate grievances in that China has effectively blocked our own tools for online communication.  For example, there is no Facebook, no Gmail there. Whoever the next president will be it is to be hoped that they will back off on this WeChat issue as part of a broader set of negotiations that may or may not take place,” ​he said.

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