Naspers can withstand the US-China trade war — CEO
• Has businesses in both China and the US
Naspers, the largest shareholder in Chinese technology company Tencent, says that it has built businesses that can withstand tensions between the US and China.
The company has a presence in the US with investments in companies such as classifieds business Letgo and a stake in Chinese internet firm Tencent.
It recently listed new unit Prosus, which houses its international internet assets, in Amsterdam. Prosus is valued at $98bn (about R1.485tn).
CEO Bob van Dijk said Naspers was constantly monitoring geopolitics, particularly the conflict between Washington and Beijing, but said their businesses were unlikely to suffer.
“If you look at the businesses we are invested in, I don’t think there’s going to be a lot of direct impact on the businesses. We almost exclusively operate with local entrepreneurs in each market.”
In an interview with Business Day, Van Dijk said this strategy had worked in India.
“We’ve invested most of our capital in the last few years in India. All our businesses there are focused on India with Indian entrepreneurs in India.”
US President Donald Trump and his Chinese counterpart Xi Jinping’s battle of trade policy has affected a number of global technology players.
In May, Google became the first major US technology company to suspend business with equipment manufacturer Huawei after its blacklisting by authorities, effectively halting updates and support services for its Android operating system, except those covered by opensource licences. Huawei generates about 48% of revenue from its consumer device segment, which will likely be the most affected by the ban.
In the latest showdown, Apple’s popular iPhone devices, which are made in China, will be subject to an import duty in the US from December, making them more expensive for consumers.
Van Dijk said trade wars did not necessarily have a direct effect on how countries were doing internally, explaining that those businesses that relied on foreign components for manufacturing would be the most susceptible to the unintended consequences of trade tensions.
“We’re not in the global supply chain business, for example. We don’t produce cars that need components from everywhere, that cross borders all the time.
“We typically have a domestic service-based business that we invest in. I think the tariff impact is still limited,” he said.
However, Van Dijk said there were two areas where trade tensions might affect everybody.
“One is if the economy slows down — and it seems that the world’s economy is slowing down, partially driven by geopolitical tensions.
“That’s going to affect everybody to some extent.”
Business always did best in places that had good economic growth, he said. The other area where everyone may feel the pain is when capital markets are nervous.
“We’ve seen investors being quite nervous about what’s going to happen in the world.
“Investors are often more short-term focused, they react quite strongly to these kind of sentiments and that hurts everybody who is in the public company environment.”