iLEAD HORIZON_October Issue_English Edition

总12期

STOCK MARKET

Editor’s 

Foreword

Dear Valued Investors,

The global economy is at a critical turning point, and it’s natural to feel uneasy in the face of a highly volatile market environment. As the President of iLead Group, I would like to share our insights on the current economic landscape and discuss how to navigate challenges and seize opportunities.

The global economy is undergoing a crucial phase of recovery and adjustment. The U.S. economy is performing robustly, with steady consumer spending, though inflationary pressures remain. However, the Federal Reserve's significant interest rate cut in mid-September has brought new optimism, injecting more vitality into the capital markets. Therefore, we firmly believe that short-term fluctuations do not signal a long-term downturn but may instead present new investment opportunities.

In the U.S., despite noticeable market volatility, the long-term outlook remains promising. Sectors like technology, healthcare, and renewable energy continue to offer strong growth prospects for investors. The resilience of the labor market and the stability of consumer spending provide a solid foundation for economic growth.

Of course, potential risks cannot be ignored. Inflationary pressures have yet to be fully alleviated, and fluctuations in energy and food prices could undermine consumer confidence. The long-term impact of the Federal Reserve's interest rate cuts remains to be seen. Additionally, the slow recovery of supply chains and ongoing global geopolitical tensions pose challenges to future economic recovery.

iLead Group, based in New York, brings together global business elites and is dedicated to providing sustainable growth strategies and efficient asset allocation solutions for high-net-worth individuals. In response to the current environment, we will adopt a balanced investment strategy that emphasizes both caution and flexibility. By diversifying across global assets, we aim to reduce risks associated with any single market or asset class. We will maintain a keen focus on sectors with long-term growth potential, adjusting our portfolio as necessary to manage short-term volatility. At the same time, we will closely monitor macroeconomic and policy changes to ensure our strategies remain flexible and responsive, striving to deliver stable returns.

While short-term market fluctuations are inevitable, we are confident in the long-term recovery of the global economy and the growth driven by innovation. Through a scientifically sound investment approach and robust risk management, we believe we can continue to provide sustained wealth growth for our investors.

In line with this vision, we are excited to introduce the iLEAD HORIZON monthly magazine, aimed at global investors and business leaders. This publication will share business wisdom, promote wealth management, and uncover global business opportunities. We look forward to working with you as we navigate these uncertain times and embrace the promising future of wealth growth. Thank you for your continued trust and support. With integrity as our compass, we will sail the seas of business, charting a course for lasting success.

President/Managing Partner

Adam Chen

Issue 1,  2024

Organizer:

iLead Group

Editor-in-Chief:

William Lo

Editor:

Lacey Liu

Layout Design:

Nemo Wang

Chief Planner:

Colin Miao

Address:

Phone:

For contribution:

99 Park Ave, Ste 830, 

New York, NY 10016

(212) 836-6060

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Co-organizers:

iLead Law Group, P.C.

Fifth Ave Entrepreneurs Club

Asian American Attorneys Association

Community Legal Aid Center of NY

Creative Director:

Josh Zhu

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Your Monthly Guide to Business and Wealth Management

 iLEAD HORIZON

Your Monthly Guide to Business and Wealth Management

  iLEAD HORIZON

What Will Be the Next Global Economic Black Swan Event?

Revelations on the Rise and Fall of China’s Richest

What’s the Impact of Weakened Global FDI?

Wealth Overview

China-US Insights

Business Law Perspectives

The Impact of Recent U.S. Legislation on the AI Industry

How the US Election Will Affect the Chinese Stock Market

Tariffs in the U.S. and Europe:

What’s at Stake for China’s Electric Vehicles?

The Legal Battle Behind TikTok’s Future

contents

iLEAD Group Insights

Overview of iLead Investment Projects and Activities

01

03

07

11

NEWS

2024.10

iLEAD NEWS

The Kansas Tax Rebate Special Fund, carefully selected by Leading Capital, is nearing the completion of its due diligence process. The target project is located in a prime area within one of Kansas's key business districts, and it has received strong support from the local government. Once operational, the project is expected to receive substantial annual government tax rebates. Preliminary estimates suggest that the annualized return on this project could exceed 25%. If the project operates as expected, not only will the fund have stable returns, but more importantly, it will generate cash flow starting from the first year.

The Commercial-to-Residential Project in the Upper West Side of Manhattan, New York, has been approved by Leading Wealth. With its prime location near Central Park and the American Museum of Natural History, along with a reasonable layout design, the project is expected to attract attention from both domestic and international investors. Preliminary estimates from the project team suggest an annualized return of over 22%. Leading Wealth’s involvement in such development projects not only demonstrates its keen market insight and operational expertise but also reflects its commitment to driving local economic development.

iLead Private Investment Fund

Approves the Manhattan Commercial-to-Residential Project

Issue 1,  2024

Your Monthly Guide to Business and Wealth Management

 iLEAD HORIZON

Your Monthly Guide to Business and Wealth Management

  iLEAD HORIZON

In 2023, global foreign direct investment (FDI) witnessed a noticeable decline. According to the United Nations Conference on Trade and Development (UNCTAD) in its 2023 World Investment Report, the total FDI dropped by 2%, down to $1.3 trillion. Investment related to the Sustainable Development Goals (SDGs) saw an even sharper decrease of over 10%. Does this shift represent a normal fluctuation, or does it reflect deeper issues within the global economic environment? What complex economic challenges and opportunities do these changes present for investors, particularly in China and the U.S.?

What’s the 

Impact of Weakened

Global FDI?

Deep-Seated Causes of the Weak FDI

The slowdown in global economic growth, combined with heightened geopolitical tensions, has exacerbated uncertainty in the investment environment. Companies have become more cautious in their market expectations, impacting their investment decisions. Trade conflicts and geopolitical disputes have increased the risks of investing. In this broader context, traditional cross-border investment decision-making is being challenged, with investors leaning towards allocating capital in domestic or more stable markets.

Economic Slowdown and Geopolitical Tensions

Tightening Financial Conditions

In 2023, tighter financial conditions, rising interest rates, and increased financing costs have made it harder for businesses to secure funding. These changes have prompted companies to adopt a more conservative approach to investment, limiting the flow of capital. While there might be a slight rebound in 2024, the current financial challenges continue to put pressure on FDI.

The global push for a minimum corporate tax rate has had a significant impact on the financial transactions of multinational companies. This policy, aimed at curbing tax avoidance through profit shifting, has made businesses more cautious in their investment decisions, affecting FDI inflows. For example, since the Brexit referendum, the UK has experienced a sharp drop in FDI. In 2023, post-Brexit uncertainty and new tariff barriers prompted many multinational companies to reassess their investment plans in the UK, particularly in sectors like finance and manufacturing, where the loss of seamless access to the EU market has made it harder to attract foreign capital.

Policy and Tax Changes

by Belle C

In-Depth Analysis: The Broader Implications of Weak Global FDI

FDI not only brings capital but also introduces technology and management expertise, driving innovation in local businesses. If foreign capital inflows are insufficient, local companies may lag in terms of technological advancements and market competition, forcing nations to rely on other economic stimulus measures, which could increase fiscal burdens and lead to policy instability.

Reduced FDI May Slow Economic Growth

Weakened Technology Transfer and Innovation Capabilities

FDI often facilitates the development of local businesses through technology transfer and knowledge sharing. Without these supports, local enterprises may struggle to sustain technological innovation, which could hinder the overall innovation ecosystem. For instance, tech parks might see slower development due to a lack of technical support, negatively impacting the region's innovation climate.

Pressure on Financial Markets and Currency Stability

Social Instability and Policy Challenges

In light of the trend of weak global foreign direct investment, high-net-worth individuals in China and the U.S. need to adopt more flexible asset allocation strategies. In the current economic environment, first of all, it is advisable to reduce reliance on a single market and diversify investments across multiple sectors and regions to mitigate risks. Second, consider increasing investments in emerging technologies and renewable energy sectors, which offer high growth potential, to capitalize on new opportunities during the global economic transition. Finally, for family businesses, fostering the next generation’s human capital and strengthening innovation management and financial planning will help maintain long-term wealth growth in an uncertain economic environment.

A decline in FDI could lead to a reduction in foreign exchange reserves, putting pressure on currencies and financial markets. In developing countries in particular, the decrease in foreign investment may impact foreign reserves, increasing the risks of currency depreciation and inflation. This pressure could negatively affect economic stability.

The reduction in FDI will directly impact employment, especially in industries and regions that are traditionally highly dependent on foreign capital. Higher unemployment rates could fuel social discontent, affecting societal stability. How governments respond to these challenges through policy adjustments remains uncertain. For asset holders in China and the U.S., this uncertainty further heightens the need for political risk management.

iLead Group Commentary:

Issue 1,  2024

Your Monthly Guide to Business and Wealth Management

01 iLEAD HORIZON

  iLEAD HORIZON

Your Monthly Guide to Business and Wealth Management

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What Will Be the Next

The global economy operates like a complex machine, driven by countless interactions between individuals and forces. Every unforeseen event has the potential to become a "black swan" in the global economy, disrupting stability and triggering far-reaching consequences. The many challenges and uncertainties facing the global economy today make predicting the next black swan event even more complicated. According to forecasts by the IMF and OECD, global economic growth in 2024 is expected to be between 2.7% and 2.9%. However, regional economic disparities could set off a chain reaction. This begs the question: What will the next global economic black swan be?

As one of the engines of the global economy, China’s economic movements are critically important. Despite multiple stimulus measures introduced by the government, recovery still faces challenges. The continued slump in the real estate market, slow growth in the export of electric vehicles and consumer electronics, and the complex geopolitical risks surrounding Taiwan all carry the potential to trigger ripple effects across global markets, increasing uncertainty.

Potential Risks in China's Economy

Black Swan Event?

Uncertainty in U.S. Monetary Policy

The U.S. Federal Reserve’s monetary policy has a profound impact on global markets. While there is a general expectation of continued rate cuts, actual economic data could prompt the Fed to maintain or even raise interest rates. Such shifts could lead to significant volatility in capital markets, with emerging markets facing risks of capital flight and currency depreciation, further destabilizing the global economy.

Policy Adjustments from the Bank of Japan

The Bank of Japan recently ended its long-standing negative interest rate policy, and there is considerable division in the market over expectations for future rate hikes. If the Bank of Japan raises rates too quickly, it could negatively impact economic growth, affecting global market stability and potentially becoming another black swan event.

Other broad factors beyond changes in national policies

The pandemic has exposed the fragility of global supply chains. Any disruption in the supply of key raw materials, such as rare earth elements, could have profound impacts on the high-tech industry. Drastic price fluctuations could set off a chain reaction in global markets.

Global economic black swan events often go beyond the scope of traditional forecasting. By thoroughly analyzing current risks and potential variables, we can better prepare for future uncertainties. In this ever-changing world, finding a steady course amidst complexity will test the wisdom of global economists and policymakers. Only by maintaining sharp insights and flexible strategies can we move forward confidently through the storms of the future.

In the face of global economic uncertainty, while we can adopt various strategies to cope with potential black swan events, the real challenge lies in identifying opportunities within these uncertainties and capitalizing on them. The future economic landscape will be shaped by multiple factors, but with adaptability and proactive planning, we can prepare for any possible challenges. The quest for stability in times of volatility will test our wisdom and capacity for innovation. Are you ready? The next economic black swan may just be the beginning of a new breakthrough.

by Claire B 

The highly interconnected nature of financial markets means that localized crises can quickly escalate into systemic risks. The collapse of a major financial institution could trigger a liquidity crisis and sharp asset price fluctuations, causing widespread effects on the global economy.

Extreme weather events could have significant economic repercussions. For instance, prolonged droughts or floods could lead to sharp increases in food prices, sparking a global food crisis.

While technological progress is usually seen as a driver of economic growth, certain breakthroughs could also pose unexpected challenges. Rapid advances in artificial intelligence (AI) may lead to large-scale employment shifts, exacerbating social inequality and ultimately reshaping the economic landscape.

Factor One

Factor Two

Factor Three

Factor Four

Issue 1,  2024

Expert Insight:

  iLEAD HORIZON

Your Monthly Guide to Business and Wealth Management

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Your Monthly Guide to Business and Wealth Management

03 iLEAD HORIZON

Industry Characteristics—

E-Commerce Speed vs. FMCG Stability

Colin Huang's Brief Reign—

The "Game of Thrones" of Capital Markets

Colin Huang's wealth narrative is mesmerizing but fraught with risk. Pinduoduo transformed from a niche platform for low-cost consumers into China's most valuable e-commerce company, with fast user and revenue growth. However, this rapid growth model, reliant on heavy subsidies and traffic acquisition, was not sustainable. When Pinduoduo's Q2 2024 financial report fell short of expectations, its stock price plunged, shrinking Colin Huang's wealth. The "Game of Thrones" of the capital market is particularly stark in e-commerce: rapid growth brings high rewards, but a slowdown results in sharp declines.

The End of the Pinduoduo Myth—

An Inevitable Reality

Once hailed as the "light of Chinese stocks in U.S markets," Pinduoduo even briefly surpassed Alibaba in market value. However, the Pinduoduo myth was short-lived. This phenomenon can be attributed to the capital market's "over-optimism." When a company fails to meet high expectations, stock volatility becomes almost inevitable.

At the same time, Pinduoduo's competitive environment worsened. Long-established e-commerce giants Alibaba and JD.com continued to innovate and expand, gradually squeezing Pinduoduo's market share. Moreover, Pinduoduo faced obstacles in its international expansion, with complex regulations and fierce competition stalling further growth. Eventually, these internal and external factors contributed to the unraveling of Pinduoduo's stock market success.

by Ballard M 

Shanshan Zhong Amid Crisis—

Why He Remains on Top

In contrast to Colin Huang's rapid rise and fall, Shanshan Zhong's wealth trajectory has been steady but more resilient. Despite Nongfu Spring being hit by a media crisis, with a decline in bottled water sales, Shanshan Zhong remains China's richest. This can be attributed to the "necessity" nature of the FMCG industry. Although rumors and negative publicity affected Nongfu Spring's brand image, the demand for bottled water, as a daily necessity, did not drop significantly.

The rise and fall of fortunes is not just a change in personal wealth but also a reflection of industry developments and market expectations. For companies to stand firm in the wealth arena, they must not only navigate industry volatility but also skillfully manage the ebbs and flows of the capital market's enthusiasm. While wealth myths may be fleeting, the long-term competitiveness of a company is the true key to victory.

Issue 1,  2024

Revelations

on the Rise 

and Fall of China's Richest

In today's turbulent global economy, businesses must focus on long-term strategic planning and implement accurate market forecasting and adjustment strategies to ensure lasting success. In terms of risk management, companies need to go beyond simple response mechanisms and turn them into strategic advantages by enhancing risk diversification and contingency planning systems. In this challenging era, modern business success will depend on having a forward-thinking strategic vision and flexible execution capabilities.

The e-commerce industry, where Pinduoduo thrives, is driven by speed and innovation. Pinduoduo's rapid expansion, fueled by penetrating lower-tier markets and leveraging viral social marketing, brought quick success, but this speed also brought vulnerability. E-commerce's reliance on traffic and the capital market's extreme sensitivity to growth makes it fragile. A slowdown in growth can trigger a stock price crash.

In stark contrast stands Shanshan Zhong's Nongfu Spring. The fast-moving consumer goods (FMCG) industry, though slow-growing, is known for its resilience. Nongfu Spring's products are essential daily items, and its brand has long been ingrained in consumers' minds. Thus, despite facing public scrutiny, the widespread brand presence and consumer reliance on daily products kept it stable.

Market Lessons:

  iLEAD HORIZON

Your Monthly Guide to Business and Wealth Management

Your Monthly Guide to Business and Wealth Management

05 iLEAD HORIZON

On China's wealth landscape, the title of the richest has become a "hot crown" in the capital market. Two leaders at the top of China's wealth pyramid, Colin Huang, the founder of e-commerce giant Pinduoduo, and Shanshan Zhong, the head of beverage giant Nongfu Spring, have both chosen to remain low-profile. However, the fluctuations in their fortunes not only reflect industry volatility but also reveal the profound impact of market sentiment on both companies and individuals. Colin Huang's brief ascension to the top was followed by the collapsed of Pinduoduo's share price, while Shanshan Zhong managed to maintain his position amid a media storm. Their journeys illustrate the clash between industry characteristics and corporate strategies.

by Lacey Liu

As the 2024 U.S. presidential election reaches a critical stage, global markets are closely watching the policy directions of the two main candidates, Kamala Harris and Donald Trump, and their potential impact on the global economy, especially China's stock market. The two candidates' sharply contrasting policy approaches will have far-reaching implications for Sino-U.S. trade relations and related industries.

As the current Vice President, Kamala Harris adopts a moderate policy stance, emphasizing a balance between multilateral cooperation and international competitiveness. If she wins, China's stock market could benefit from her efforts to stabilize Sino-U.S. trade relations. Her policy leans toward resolving trade disputes through multilateral systems and negotiations, rather than relying solely on unilateral tariffs or sanctions.

Technological Innovation and Clean Energy: Harris is a strong advocate of the green economy and technological innovation, with policies that support accelerating the transition to clean energy. China, as the world's largest supplier of solar energy and electric vehicle components, could benefit from this shift. If the U.S. under her leadership expands investment in clean energy infrastructure, Chinese companies in the renewable energy sector, such as solar and wind energy, could see new growth opportunities.

Semiconductors and High-Tech: In the high-tech sector, Harris may advocate reducing U.S. sanctions on China's technology industry, promoting a more constructive cooperation policy. While her administration might not entirely lift the technological blockade, it could foster more open exchanges between the tech sectors of China and the U.S. This would offer some breathing room for China's 5G, artificial intelligence, and semiconductor industries, easing external constraints on critical technologies.

Consumer Goods and Healthcare: Harris’s focus on healthcare reform, particularly policies concerning health insurance and drug price controls, may boost U.S. demand for Chinese medical devices and pharmaceuticals. This means Chinese medical equipment manufacturers and high-end healthcare industries could indirectly benefit from the expansion of the U.S. healthcare market. Additionally, companies in the health and nutritional supplement sectors could gain favor as part of a global push for healthy lifestyles.

If Trump is re-elected, his consistently tough stance on China is likely to dominate market expectations once again. He advocates reducing U.S. economic dependence on China through high tariffs and technological blockades, while continuing to push his “America First” agenda. These measures could escalate trade tensions between the U.S. and China, putting additional pressure on China's stock market.

Traditional Energy: Trump is a staunch supporter of the fossil fuel industry, and his energy policies would promote increased oil and gas extraction in the U.S., weakening environmental regulations. As a global supplier of fossil fuel equipment, particularly in oil equipment manufacturing and coal technology, China could benefit from the rebound in global demand for traditional energy.

Infrastructure and Construction: Trump has promised massive investment in U.S. infrastructure, which could present opportunities for the global construction industry. As a major exporter of construction equipment and materials, China could see an increase in orders. Especially in the context of accelerated global infrastructure development, related construction and engineering companies might gain a share of the market.

Cryptocurrency and Fintech: Trump’s relatively loose regulation of the traditional financial system could fuel the growth of the cryptocurrency market. Although cryptocurrency is not legally recognized in China, the country remains a major base for cryptocurrency mining and blockchain technology applications. As global demand for digital assets rises, China could still benefit. Furthermore, fintech and blockchain technology companies could see new market opportunities globally.

The 2024 U.S. presidential election will have a profound impact on the global economic landscape, especially in shaping the trajectory of Sino-U.S. trade relations. Whether it's Harris's moderate policies or Trump's hardline stance, both bring different risks and opportunities for China's stock market. For China, investors must be cautious of the looming trade storms while actively seizing new opportunities in Sino-U.S. economic relations.

Faced with the uncertainties brought by the 2024 U.S. election, investors should adopt flexible investment strategies, balancing between potential risks and structural opportunities. It is advisable to increase allocations to safe-haven assets, such as gold or renminbi assets, to hedge against market uncertainties. At the same time, close attention should be paid to U.S. policy developments and Sino-U.S. trade dynamics. Investors should adjust their portfolios in a timely manner, ensuring short-term gains during market fluctuations while preparing for long-term growth.

VS

the Chinese

 Stock Market

Strategic Recommendations: 

  iLEAD HORIZON

Your Monthly Guide to Business and Wealth Management

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Your Monthly Guide to Business and Wealth Management

07 iLEAD HORIZON

What’s at Stake for China’s

Electric Vehicles?

In an increasingly globalized world, China's electric vehicle (EV) industry, once a rising star, is now caught in the whirlpool of U.S. and EU trade wars. The protectionist measures from the U.S. and the EU are no longer empty threats. From the EU's temporary tariffs to the U.S.'s 100% tax hikes, these policies represent more than just trade disputes—they have sent shockwaves through the global new energy market. So, where does the future of China's EVs lie? Tariffs have erected a high wall, but the world beyond that wall is still full of opportunities.

The tariff policies imposed by the U.S. and the EU should not be taken lightly this time. After a 13-month-long anti-subsidy investigation, the EU decided to impose tariffs ranging from 15% to 30% on Chinese electric vehicles. According to the European Commission, the low prices of Chinese EVs are deemed to pose an unfair competition threat to the EU market. This policy isn't just a numbers game—it's a significant blow to China's manufacturing sector.

The U.S. is not backing down either, raising tariffs on Chinese EVs to a staggering 100%. For instance, tariffs on BYD's new model, released in the fall of 2024, are set at this rate, which means the cost of these EVs could double compared to the original plan, severely impacting their competitiveness in the U.S. market. This move undoubtedly presents a formidable challenge for Chinese EVs in both the U.S. and EU markets.

Facing the tariff barriers set by the U.S. and EU, leading Chinese EV companies are under immense pressure. Companies like BYD and NIO, which had been aggressively expanding globally, now see their plans disrupted by tariff policies. According to a report by Rhodium Group, these tariffs could reduce Chinese companies' profits in the European market to nearly nothing. For example, BYD's EVs in Europe could see their profit margins severely squeezed once the 25% tariff is added.

To counter this challenge, BYD has already established production facilities in Hungary, a move aimed at circumventing the hefty tariffs. NIO is also actively pursuing localized production to mitigate the tariff pressure in the U.S. and EU markets. However, whether this localization strategy, involving production line migration and supply chain restructuring, can offset the loss of market share remains to be seen.

This tariff war has triggered a ripple effect across the global supply chain. Internal disagreements within the European market have also provided opportunities for Chinese companies. Take Germany, for example, whose dependence on Chinese EV technology is far greater than that of France. Such internal conflicts make the German government more cautious when dealing with tariff policies, fearing the loss of an important business partner.

At the same time, the contradictions between environmental policies and protectionist actions in the U.S. and EU add uncertainty to the market. European consumers' sensitivity to price and technology means Chinese EVs face a tough competitive landscape, while U.S. and EU policies seem to struggle between promoting market development and restricting the new energy industry.

China will not sit idly by, and countermeasures are already in the works. For instance, China may impose tariffs on large-displacement vehicles from the EU or take similar retaliatory actions against U.S. products. These measures could affect the strategic layout of U.S. and EU markets. Moreover, China's EV industry might seize this opportunity to accelerate the restructuring of its global supply chain and find a new market position. As a representative of China's industrial leap in the new energy sector, whether EVs can maintain their competitive edge after the tariff storm remains a key question in the new energy era.

This tariff war is undoubtedly a dark cloud hanging over China's EV industry. In the broader context of global supply chain reshaping, it is not just a battle between Chinese companies and U.S/EU markets—it is a pivotal moment in the global reconfiguration of industries. The future of China's EVs depends on whether they can find a new balance in this global competition.

by Lacey Liu 

Issue 1,  2024

Tariffs in the U.S. and Europe:

In-Depth Analysis:

  iLEAD HORIZON

Your Monthly Guide to Business and Wealth Management

Your Monthly Guide to Business and Wealth Management

09 iLEAD HORIZON

The Impact of Recent

U.S. Legislation 

by Henry G 

As artificial intelligence (AI) technology advances rapidly, U.S. lawmakers are increasingly focused on regulating the industry to balance technological progress with public interest. In 2024, the U.S. introduced a series of new AI-related laws and policies aimed at protecting user privacy and promoting fair competition. These new regulations are set to have a profound impact on tech giants, AI startups, and various key industries.

Privacy protection is at the heart of the new AI legislation. While AI enhances services through large-scale data analysis, it has also raised concerns about data misuse. The 2024 Data Privacy and AI Transparency Act requires companies to obtain explicit consent when collecting and using personal data, while also offering the right to opt out. Specifically, businesses must clearly explain how user data is collected and used and allow users to manage their privacy settings.

Tech giants like Google and Meta, which extensively use AI for targeted advertising, will now need to ensure algorithm transparency, allowing users to understand the basis for ad targeting. This regulation enhances user control but also increases compliance costs, as companies will need to redesign their data processing systems to comply with the new rules. This may involve technical adjustments and process optimization.

Startups face their own challenges. Privacy regulations now require data protection to be considered from the early stages of development, which could significantly raise the entry barrier. The costs and time pressures of handling large datasets during the development of deep learning models will intensify. Startups will need to invest more resources in data security and compliance reviews, potentially affecting their agility and competitiveness in the market.

In addition to privacy protection, the new legislation addresses the fairness and ethical aspects of AI algorithms. The Algorithm Fairness and Transparency Act mandates regular audits of AI systems to ensure decision-making transparency and fairness.

In the financial sector, AI is widely used for credit scoring and risk management, but AI models can make biased decisions based on historical data, leading to unfair loan approvals. The new regulation requires financial institutions to disclose the design principles and data sources of their algorithms, ensuring fairness in the loan approval process. This will push financial institutions to pay more attention to algorithm design, reducing potential bias.

The healthcare industry also faces ethical challenges. IBM's Watson Health project, which provided cancer treatment recommendations, sparked controversy due to significant differences in outcomes for different groups. The new rules require medical AI systems to undergo rigorous ethical reviews, ensuring that recommended treatments do not result in unfair outcomes based on factors such as race, gender, or age. These regulations push companies to focus more on the fairness of their algorithms, driving advancements in medical AI.

Microsoft's acquisition spree in the AI sector, including its investment in OpenAI, has attracted significant attention. The new law will subject tech giants to stricter scrutiny before acquisitions, ensuring that mergers do not stifle market competition or curb innovation. At the same time, the law supports AI startups by increasing government funding for AI research and development, lowering startup costs, and providing stronger intellectual property protection. This will alleviate market monopolization and promote more innovation and development in AI technologies.

1、Privacy and Data Protection: A Legislative Focus

2、Ethics and Fairness: The Challenge of Algorithm Transparency

3、Competition and Innovation: The Intersection of Antitrust and AI

The U.S. AI legislation will not only affect the domestic market but will also have a ripple effect globally. The new laws may accelerate the establishment of global AI regulatory frameworks, especially in the context of U.S.-China tech competition, potentially intensifying the rivalry between the two nations. Although China's Data Security Law and Personal Information Protection Law share similarities with U.S. legislation, the two countries differ in their regulatory standards and policy approaches. This divergence could lead to an increasingly complex market environment for the global AI industry. Multinational companies will need to adjust their global strategies flexibly to maintain a technological edge while complying with varying regulations.

From privacy protection to algorithm fairness, and from antitrust regulation to international competition, these laws set new rules for the future development of AI technology. The primary challenge for companies will be how to continue innovating while staying compliant with regulations. As with every technological revolution in history, legal changes accompany technological advancements, and in the future, with the continuous updates in legislation and technological progress, the AI industry is set to develop along a more regulated and healthy path.

4、International Cooperation and Global Standards: U.S.-China AI Competition

Issue 1,  2024

on the AI Industry

iLead Insights:

  iLEAD HORIZON

Your Monthly Guide to Business and Wealth Management

Your Monthly Guide to Business and Wealth Management

11 iLEAD HORIZON

TikTok's lawyers argued that the U.S. government failed to provide sufficient evidence proving that TikTok posed a real national security threat. U.S. courts generally require the government to provide specific and clear evidence when issuing administrative orders in such cases. This strategy capitalized on the high standards of "procedural justice" and evidence in the U.S. judicial system, placing the government on the defensive in the legal battle.

TikTok’s lawyers also invoked constitutional protections, arguing that the executive order violated the Fifth Amendment of the U.S. Constitution by not giving the company a fair opportunity to defend itself. This argument effectively introduced the U.S. judiciary's long-standing tradition of limiting executive actions, further strengthening the case.

The Legal Battle in the U.S.-China Competition: 

How to Leverage U.S. Rule of Law to Defend Rights

The TikTok case underscores the deeper confrontation between China and the U.S. in the areas of technology and data privacy, a battle that extends beyond executive orders and permeates the legal systems of various countries. Given the complexity of the situation, Chinese companies can draw three core lessons from TikTok's legal experience:

TikTok also highlighted its contributions to the U.S. economy, employment, and technological development, particularly in the context of its large U.S.-based workforce. It argued that the ban would negatively impact the U.S. economy. This argument not only had a positive impact in court but also garnered public support, providing the company with political breathing room.

The independence of the U.S. judiciary offers companies an opportunity to mount a legal defense, which requires firms to be well-prepared for compliance before entering the market. TikTok, for example, took early steps to localize data storage by using third-party companies to house U.S. user data, aiming to prevent potential legal conflicts. Chinese firms can look to this compliance model to bolster their ability to respond to legal risks.

TikTok's successful legal defense also demonstrates how to leverage U.S. principles of "procedural justice" to fight for their rights. By hiring experienced international legal teams, Chinese companies can use U.S. legal procedures to challenge unreasonable executive orders and ensure fair rulings.

In a highly tense U.S.-China environment, companies need not only legal defenses but also public relations efforts and support from economic stakeholders. By showcasing its positive contributions to the U.S. economy and society, TikTok secured political support, which allowed it to weather the storm. This strategy reminds companies that in cross-border litigation, economic interests and courtroom battles are often intertwined and can complement one another.

01、Preemptively Establish Compliance and Defense Strategies:

02、Utilize Procedural Justice to Defend Rights:

03、Combine Legal and Public Relations Strategies:

Legal and Brand Protection: The Key to Globalization

A Brief Review of the TikTok Ban:

Since 2019, TikTok has been embroiled in the political and legal tug-of-war between China and the U.S. The Trump administration initially attempted to ban TikTok by invoking the International Emergency Economic Powers Act (IEEPA), citing national security risks due to potential misuse of U.S. user data. Although the Biden administration adjusted this stance upon taking office, TikTok remains under continuous scrutiny, highlighting the complexities of this battle.

While these historical factors form the backdrop of TikTok’s case, what is more noteworthy is how the company has effectively leveraged legal defenses within the U.S. judicial system, buying itself time and opportunities.

TikTok's Legal Strategy: Winning the Battle Against the Ban

The main issue TikTok faces centers on data privacy and national security concerns. Its legal team employed the following key strategies:

The Legal Battle Behind

by Steven Y 

Issue 1,  2024

01、Challenging the Sufficiency of Evidence:

02、Defending Constitutional Due Process Rights:

03、Emphasizing Economic Contributions:

iLead Insights:

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Your Monthly Guide to Business and Wealth Management

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