In every country, there is always a potential scapegoat and sometimes the rhetoric gets bigger and sometimes the other country has to do something. It is often the same in business, all the small companies need to compete against the larger companies and sometimes it is motivating and the pie can be made larger which is the best solution. Back to the country scapegoat. For decades, China has been the manufacturing center of the world and it has grown economically. If you go back to watching Shark’s Den, you will hear one of the sharks say to the effect, your costs are expensive being made in the US, I have connections to Chinese companies to lower the costs and improve margins. The Sharks were reflecting economic reality, manufacturing had moved from the US to China and it was and still is less expensive to manufacturer in China than the US.

In an article by Joe McDonald of the Associated Press, the US and China are having a technology feud. You will recall and still hear, Chinese websites send the information back to China and the government does something with it. The large communication providers such as AT&T, Verizon and others have been told not to use Huawei parts in their communication systems. There are other users and it was and is relatively easy to use other companies.

In the latest volley, China has told its computer equipment companies to stop buying Micron Technology chips. The instructions of the Chinese were for operators of critical information infrastructure in China to stop purchasing products from Micron.

The official review of Micro under China’s increasing stringent information security laws was announced after Japan joined Washington in imposing restrictions on Chinese access to technology to make processor chips on security grounds.

Beijing has been slow to retaliate, possibly to avoid Chinese industries that assemble most of the world’s smartphones, tablet computers, and other consumer electronics. China imports $300 billion worth of foreign chips a year.

Chinse foundries can supply low-end chips used in autos and home electronics, but cannot support smartphones, AI, and other advanced applications.

Linking to dividend paying stocks, China is the second largest economy after the US and it makes sense for many companies to have operations in the country. Micon supplies Apple smartphones with $2.5 billion in chips. One can imagine, China needs the chips but has to show the world it is make decisions which affects a US company. No one is prepared when a country imposes sanctions on another company because the world is very interconnected and it is seen and expected to be short term in nature. Many of us thought the sanctions against Russia were going to be short term in nature, but sometimes things happen. For your investments, it is good to be diversified so if one market has issues, other markets will allow the company to meet the needs of its customers to make a profit and pay dividends.

There are more questions than answers, till the next time – to raising questions.