Tik-Tik-Tock, China’s on the Block

Tik-Tik-Tock, China’s on the Block

My son Tom made his chops at Shake Shack a few years ago by bringing his Gen Z perspective to their marketing department by suggesting that they would benefit by using TikTok for getting their product message out to the young target market that they wanted to attract. He had been using the TikTok app to generate personal mini videos that gave him a creative outlet for his video making Jones. The Shake Shack brass was impressed enough to put him charge of video content for their brand and off he went. After Shake Shack, Tom went to work for an ad agency that made him a video producer and he honed his video production skills enough so that he wound up becoming an independent video producer with a growing repertoire of clients and skills. I’m not sure TikTok is what made this all happen for him, but it strikes me that it played a pivotal role. I’m also betting that Tom is more favorably inclined towards TikTok than many of the legislators that have been grilling the TikTok CEO before a Congressional Committee in the past day.

It is more than coincidental, I’m sure, that this Congressional testimony and inspection of TikTok is taking place days after the Moscow summit of Xi and Putin that I wrote about a few days ago. There has been much concern expressed in the past few years that Chinese technology is beginning to eclipse American technology. We were fine running roughshod over the world during the first fifty years of the Information Revolution. That’s not to say that we ourselves didn’t have some expressed concerns about the way data was being gathered among our own citizenry and how privacy barriers were being breached at every turn, but generally, since these were solid American companies like Microsoft, Apple, Amazon, Google, Facebook and whatever, our concerns were mild at best. When those behemoths came up against non-U.S. upstarts like the Israeli Waze or many other acquisition opportunities, that was all good. When China started its buying spree of U.S. tech startups, even going so far as to scour the bankruptcy roles to find bits and pieces in the patent trash bin, the U.S. Department of Commerce got its dander up. Try to use Alibaba to buy something you might otherwise buy on Amazon or Wayfair. It barely works and confidence in fulfillment is pretty damn low in my opinion. Let’s face it, whether it should be or not, our technology industrial policy is not just ethnocentric, it is decidedly anti-Chinese.

That did not stop U.S. companies from heavily outsourcing to China over the past few decades. Some would say that it is that very strategy that made Apple great. Who among us hasn’t been impressed to order something online from Apple and find it on our doorstep direct from Shenzhen in two days with excessively cautious packaging and personalized engraving on the device to boot. I know I used to think of that as an example of the Golden Age of globalization where American creativity and design were deployed in Chinese automated manufacturing all done with some combination of American and global quality standards and all done just-in-time. It was and still is a beautiful thing. Obviously that stated to change before COVID hit, but once the supply chain got totally rattled by what was deemed to be a Chinese-originated disease (whether by bad sanitary habits, cultural animal husbandry oddity or purposeful but subtle biological warfare), all bets were off. Apple started working its global network for manufacturing alternatives to diversify its sourcing and then silicon chip shortages made us all realize that we had fallen asleep at the technological switch and allowed an important part of our lifestyle to be held hostage to foreign chip makers.

When I bought a Mercedes GLS in 2021 it had a heads-up display that gave me a fighter pilot’s view of key information that I needed for driving on the windshield in front of me. I had seen the technology before and hadn’t paid a lot of attention to it, but as I drove that 2021 car I began to love that feature and would talk about it with friends all the time, telling them how useful it was and how I would never be without it. When that particular GLS started to have 48V battery problems that Mercedes could not solve (so much for Germany engineering perfection), I was forced to swap out that car for a new 2022. None of the ‘22 models at the local dealership had the heads-up display feature and I was sorely disappointed. I was told that it was the victim of the chip shortage since it apparently required a similar chip all by itself that was used as the central chip for the car’s main system. That way it was put to me was that Mercedes could either deliver one GLS car with that feature or deliver two GLS cars without it. Case closed in a supply chain constrained world. Heads-up display went away, at least for the time being. Perhaps when the ChiPs legislation that promotes redevelopment of the American silicon chip manufacturing sector takes hold that feature will come back. We’ll see.

I am not sure how we are all supposed to feel these days about the warring state of the world. On the one hand it seems a lot more civilized for aggression to get played out through industrial policy than on the actual battlefield or with nuclear arsenals. But its not like that threat has gone away altogether either. We may not be storming the beaches of Normandy or initiating bombing raids on Pearl Harbor, but between Iraq, Afghanistan (both Russian and U.S. foibles) and now Ukraine, we are not exactly out of the land-based shoot ‘em up war game. Of note is that both sides are using so much of their stockpiled armaments that we seem on the verge of seeing defense production capabilities get ramped up on either side of the fence in recognition that we have not provided enough munitions creation capacity to satisfy world demand. That is a decided step in the wrong direction. More guns, less butter and I know how much we all like butter. And furthermore, we haven’t launched any nukes lately around the world, but we have come closer in the Ukraine conflict to rattling that saber than we have as a world since the Cuban Missile Crisis a distant sixty years ago.

So, maybe man’s need to exhibit aggression against one another is better played out over social media apps and data gathering and storage (TikTok suggests that we should feel better that they are planning to store all U.S. gathered data onshore in the U.S. – as though any of us still think that physical storage is where its at in the data world….Hello! Cloud!). But Ukraine and the not so veiled threats and suggestions about Taiwan should make us realize that data wars are just precursors to bombs and bullets. Mariupol has replaced Dresden as the poster child for genocidal destruction. Its ironic that Ukraine supplied the world more programming talent than perhaps any country in the world, and yet they are not dodging data bullets, but real live ammunition rounds every day.

I suspect that the libertarian-leaning United States of America will find a way to ban TikTok if it does not agree to sell its U.S. operations to an American company and distance itself from the prying eyes of Beijing. There is a part of me that knows that will hurt globalization and that seems a bad thing. But then again, I am pro sanctions against Russia for its Ukrainian incursions and that hurts globalization as well. Maybe the Golden Age of globalization was a Camelot moment and will recede into being more a dream than a reality as we find that TikTok means that China’s on our block and not in a good way.