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Tik Tok, China and National security-- Unethical Practice In Global Trade

Chinese investment in Indian start-ups has surpassed USD 4.6 billion in 2019. The Chinese corporate, tech firm and investors hoarded their surplus investment in Indian market. Majority of them where the offshoots of the ideas and applications already tested in western market, especially the U.S. Ironically, Chinese government did not allow such western tech companies to operate in China. ByteDance has already been under suspicion in 2019 on account of a national security review in the United States.

Photo Credit : Reuters

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Indian Government bans Tik Tok TikTok, formally Musical.ly, is a popular video sharing app that was bought by Chinese company ByteDance in 2017. 

The government used a provision in the Information Technology Act  under section (69A) which allows the government to block online content or applications if the application or content was found in malicious activities that concern national security.

Byte Dance has already been under suspicion in November of last year on account of a national security review in the United States. The investigation centers around the similar security concern and collection of user data.

Ban cites the security concern by the Indian government in view of the information available that they were engaged in activities "which is prejudicial to sovereignty and integrity of India, defence of India, the security of the state and public order". The banned 59 apps with China links include TikTok, SHAREit, UC Browser, Baidu map, Helo, Mi Community, Club Factory, WeChat and UC News. 

The Chinese ownership of the app is now in hot water with the Indian government since TikTok ended up on a list of dozens of Chinese apps that were banned in the country citing threats to national security.

This hits TikTok in a critical market: App analytics firm Priori Data shows that TikTok has been downloaded almost 100 million times in India in 2020 so far - the most out of 55 countries available on the Priori Data platform. 

Global Times, China's mouthpiece estimated the loss of Chinese internet company ByteDance – mother company of Tik Tok — as high as $6 billion as a result of banning 59 apps.

According to the sources, Tik Tok is mulling legal steps against the government on ban. Tik Tok in official statement denied any breach of data. Company alleged that it was hastily done and denied the proper time to respond.

Chinese investment in Indian start-ups has surpassed  USD 4.6 billion in 2019, leading a tremendous growth of around 120 13 percent staring from USD 381 million in 2016. Two major Chinese investors- Alibaba and Tencent- has USD 2.6 billion in four Indian unicorns like Paytm, Snapdeal, BigBasket and Zomato. The Chinese incorporates, tech firm and investors hoarded their surplus investment in Indian market. Majority of them where the offshoots of the ideas and applications already tested in western market, especially the U.S. Ironically, Chinese government had already placed ban on most of such entities and did not allow them to operate in China. Whilst, Chinese tech Start-Ups, having blindly copied, or acquired inorganically, ran free in China with Chinese version. A ready market helps them scale up quickly. China's government parked their money in direct or indirect way through multiple entities -- some of them offshore.

While bilateral trade was USD 95.7 billion in 2018, trade deficit between the two countries had hit a high of $63 billion in 2017-18. The steep trade deficit with China is evident from the fact that between April 2019 and February 2020, China accounted for 11.8 per cent of India’s total imports while India’s total exports to the China was 3 per cent. Out of total imports from China, Electronics items make bulk of imports over $18 billion by Feb 2020. The uneven trade is hurting Indian already as our starts ups and factories simply scout for cheap Chinese commodities, denying the manufacturing industry to scale up and innovate. India quickly grasped the higher economic scale in terms of service industry but on a very week foundation of manufacturing capability.

International trade is a  very complex issue now and the web of supply chain makes the trade embargo a difficult decisions even on the ground of national security. The decision of Indian government on banning Chinese apps are purely on the security aspect and it is undeniable. At the same time, government must assure the Start-ups to benchmark their funding and source of funding. 

China's belligerent act and stand-off in Galwan area at LAC where 20 Indian soldiers were killed by Chinese Army is national crisis and revokes the extraordinary measures by Indian government. For emerging India with its vibrant democracy, business is viable if it is transparent and ethical and that must be without the surfeit of such trade and investment.