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How the US/China trade war is squeezing Norfolk tech

PUBLISHED: 07:00 15 February 2020 | UPDATED: 07:48 15 February 2020

Norfolk and Suffolk tech companies on the impact on their businesses of the US/China trade war. Picture: PA/Archant

Norfolk and Suffolk tech companies on the impact on their businesses of the US/China trade war. Picture: PA/Archant

PA/Archant

A technological arms race between the US and China may on the surface appear a macro-economic storm brewing far from the East of England's shores.

How has the US/China trade war impacted tech in Norfolk and Suffolk? Picture: Getty/ArchantHow has the US/China trade war impacted tech in Norfolk and Suffolk? Picture: Getty/Archant

But the tech industry in Norfolk and Suffolk is already feeling the ripple effects of global trade tensions.

Donald Trump has been battling the Chinese government on trade since July 2018 - with each nation increasing tariffs in a bid to derail the other's economy.

In January both global leaders agreed to "phase one" of the negotiations, with China pledging to boost US imports by $200bn above 2017 levels, as well as strengthening intellectual property rules.

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In return the Trump administration agreed to halve some of the new tariffs it had imposed on China.

Sarah Mintey of Developing Experts. Picture: Developing ExpertsSarah Mintey of Developing Experts. Picture: Developing Experts

But industry commentators have made it clear the war is far from over.

Richard Waters, the west coast correspondent for the Financial Times, says: "The tech industry has little to cheer so far from a campaign that was once said to be waged in their interests."

But where British tech has not been directly targeted, our tech is still feeling the pinch of China tightening its regulations against foreign influences.

One example is China's recent announcement that it would be banning foreign teaching materials in public primary and secondary schools.

Paul Graham of Matrixx. Picture: MatrixxPaul Graham of Matrixx. Picture: Matrixx

The Ministry of Education published a statement saying that the move had been made to "insist on the guiding principles of Marxism and reflect the Chinese style".

The news spelled potential trouble for Norwich's Developing Experts, which for 18 months had been working on an online teaching resource to be sold into Chinese schools.

Sarah Mintey, founder of Developing Experts, says that although the current regulation only applies to printed material she has taken steps to comply with regulation and still be able to trade into China.

"We found out about this at Easter and we were given the heads up - but it only went public a few weeks ago," the former head teacher said.

"We had to work a way around and get creative - luckily because we're online we can deal with a third party who will sell it into schools on our behalf."

Ms Mintey said that having a contact within the Chinese government was key to any negotiations.

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"We have a government consultant who advises us, and if it weren't for the intelligence at that level being fed to us we certainly wouldn't know about policy loopholes. It would be challenging to launch a product in China without the intelligence needed to make sure you are compliant to new policy being induced," she added.

As well as finding ways around Chinese trade policy, Ms Mintey said it is increasingly difficult to move money out of the country due to increased political tension in Hong Kong - previously the route through which cash was moved out of China.

"The process of exporting cash has become far more rigorous," said Ms Mintey. "I have been informed that half of the financial institutions in Hong Kong have moved out or are in the process of moving to other locations - they'll moving to Singapore or mainland China."

This is as a result of riots which erupted in June, protesting against plans to allow extradition to mainland China.

"You're only as good as your intelligence," Ms Mintey said. "I think education to some extent is under more scrutiny because of the need for young people in China to adopt their country's values."

The Ministry of Education's statement reinforces this, saying the changes had been made to reduce "problems of political direction or value orientation", given pupils "bear the great responsibility of rejuvenating the Chinese nation".

"It's something you have to adapt to," said Ms Mintey. "China is a big risk - but the returns are ridiculous. If it takes off, then the risk outweighs the dangers."

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Ms Mintey added that she had not been trading with China for long enough to know how much US/China trade tensions had impacted policy.

"I am not clear about how frequency new policies were launched prior to the trade wars with the USA," she said. "I only have 18 months of policy experience; all I know is that each month there are new policies coming out."

Her concerns were echoed by Paul Graham, director of UK Engineering at Matrixx Solutions, based in Ipswich's Adastral Park.

Matrixx are developers of platforms used on the 5G network.

Mr Graham said: "It's impacted the 5G debate because the technology could being supplied by Huawei. I think it's a US concern that a Chinese foreign power would become dominant in that field."

The US has pressured the UK government over its decision as to whether or not Huawei should supply a major part of the British 5G infrastructure.

Last week secretary of state Mike Pompeo tweeted warning that Britain's sovereignty will be in jeopardy if it allows Huawei to provide the service.

"I'm not sure there's actually a threat from Huawei," said Mr Graham. "It's more that you're building a national infrastructure which is important to your economy and relying on China.

"We need a viable competitor to Huawei. There isn't a major UK infrastructure company that is building 5G networks and the government should be investing in its own 5G infrastructure."

He added: "This issue is going to be around for the next five to ten years and will rise up the national agenda - it's really whether Western powers want to invest more in the 5G space."

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