Microsoft's Sony Nintendo recently submitted a public document (original address) to the US Trade Representative Office (USTR) to jointly oppose the United States to impose a 25% high tariff on host products produced in China during the Sino-US trade war.
The article states that tariffs for game consoles will:
• Injury to consumers, video game developers, retailers and host manufacturers;
• Put thousands of high-value, high-return US jobs at risk
• Killing innovation inside and outside the industry.
II. The game console is a highly specialized product with a complex supply chain
Unlike PCs, each of our game consoles has custom hardware configurations and designs, and offers unique and differentiated features based on proprietary software operating systems connected to each company's unique platform and services. Above. The games and services designed for each series of hosts must be designed separately through a labor-intensive process, that is, porting to another host machine or PC, which is a huge cost to video game publishers.
In 2018, more than 96% of the game consoles imported from the United States were made in China. Through the investment of our company and partners for many years, China's game machine supply chain has been developed. If the purchase is completely transferred to the United States or a third country, it will lead to a serious disruption of the supply chain, and even increase costs, beyond the proposed tariff cost of products already produced under lower profit margins. Each game console consists of dozens of complex components from multiple countries. Even individual supplier changes must be carefully reviewed to reduce the risk of product quality, reliability and consumer safety issues. Tariffs will seriously disrupt our company's business and add significant costs, thereby reducing the sales of game consoles and the sales of games and services that drive the profitability of this segment.
The fifth part of the article:
V. Increasing tariffs on game consoles will not “actually or effectively eliminate” China’s intellectual property rights implementation issues
Although we appreciate that the management goal is to strengthen intellectual property protection in China, the game console is not the focus of this survey. In any Chinese industrial policy, such as "Made in China 2025", the game console is not the focus. In fact, the game consoles developed and branded in China are almost non-existent. A game console launched in 2016 has not been well received by the market. In addition, because of the nature of our business model (described above), the profit margin is very low, so its motivation to steal intellectual property to produce counterfeit game consoles is extremely weak. The game console is also a relatively complex device, so the amount of work and cost required to produce infringing or illegal products will not be based on potential rewards.
At the end of the document, there are signatures from executives from the relevant departments of the three companies.