NXPI NXP Semiconductors NV

By Dan Strumpf and Yoko Kubota 

HONG KONG--Technology has emerged as the early battleground in the U.S.-China trade dispute, triggering predictions of significant changes in the global investment strategies of Chinese tech companies.

Chinese companies will be more likely to invest in emerging markets such as India and Southeast Asia, said Fan Bao, the chairman and chief executive of investment bank China Renaissance Partners.

In the current environment, Mr. Fan said, he foresees reduced investment in the U.S. "The reality is, it's difficult to get things done...given uncertainty around approval."

His comments came during The Wall Street Journal's two-day D.Live Asia conference in Hong Kong, following a turbulent week for the technology sector that saw regulators in the U.S. and China taking aim at some of the biggest companies in the field.

Among the week's developments: Chinese regulators signaled a rocky path ahead for the $44 billion attempted takeover by U.S. chip maker Qualcomm Inc. of NXP Semiconductors NV. That came just days after the U.S. Commerce Department slapped Chinese telecom giant ZTE Corp. with a seven-year ban on buying U.S. products, a move that ZTE said threatens its survival.

The moves have thrust technology companies onto the front lines of an intensifying trade dispute between the U.S. and China. The Trump administration has ratcheted up pressure on Beijing with threatened tariffs on a total of $150 billion in Chinese imports, and China has shot back with plans for tariffs of its own.

"I'm very concerned," Charles Li, chief executive at Hong Kong Exchanges and Clearing Ltd., said Friday. "This is just inevitable because you have a rising power and an existing incumbent power and they've all sort of frictions--particularly when their political and ideological systems are different."

As trade tensions escalate, some executives expressed concerns about rising economic nationalism. Among them was Carlos Ghosn, the chairman of the automotive alliance between Renault SA, Nissan Motor Co. and Mitsubishi Motors Corp.

While Mr. Ghosn said he is worried, he also said he doesn't see the dispute becoming a full-blown trade war. "I think it's more a pressure to renegotiate deals" that the U.S. considered were not too fair, he said.

Mr. Ghosn, referring to the renegotiations of the North American Free Trade Agreement, said that for auto makers, knowing what the trade rules are going to be in the future is more important than the details of the rules. Car makers plan for 10 years down the road when it comes to building plants or where and which vehicles to make, and must know what the rules are going to be then to make meaningful plans, he said.

"Being in a situation where one party is not happy with the deal is very preoccupying," he said.

Among the reasons trade friction has increased is U.S. accusations that China has been trying to steal U.S. technology through unfair trade practices.

Chinese companies have an advantage in the tech face-off with the U.S. in their deep set of data, said Ralph Haupter, Microsoft Corp.'s corporate vice president. But they can face challenges competing in multiple markets.

"If you look at AI, you need data; China has that. You need talent; China has a lot of that," he said. "At the same time, all of the companies which are building businesses in China, they struggle because they either don't find a way to get out of the domestic market or they go to the U.S. immediately."

Write to Dan Strumpf at daniel.strumpf@wsj.com and Yoko Kubota at yoko.kubota@wsj.com

(END) Dow Jones Newswires

April 20, 2018 07:45 ET (11:45 GMT)

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