Original Analysis on Current Events

FAO Global conducts analysis on hundreds of significant events a week that impact the business environment between the U.S., China, and emerging economies in Asia. While most of these assessments are for client and internal use, we like to share events that may have been overlooked if you only follow the major media outlets. We send these assessments out via our newsletter.

Highlights you may have missed for the week of July 1-5, 2019.

1. Major or Minor? Lawmakers Keep Close Eye on Huawei Concession – Wall Street Journal 

Our Analysis: During the G20 Summit last weekend, Trump and Xi ceased agreed that Huawei can buy technology from U.S. companies again, in addition to soybeans purchased by China. However, Huawei still poses threat of fraud technology to U.S. and the situation concerns U.S. lawmakers regarding intellectual property. The concession made by the U.S. is good for U.S. companies who have partnerships with Huawei, as they can continue to sell their products or services and might recover from the losses of the previous ban. As the future of U.S. and China trade war is still unclear, FAO Global suggests that U.S. companies look for and establish partnerships with other Asian countries such as Vietnam and Thailand to alleviate the risks of unforeseeable policy changes made by U.S. or China. 

Analysis Contributed by Sophia Song, FAO Global Associate 

2. EU, Vietnam sign free trade agreement – China Daily  

Our Analysis: Europe has long been known as an industrial hub, and most countries in the EU have highly developed agriculture, manufacturing, and investment sectors. In Asia, Vietnam is known for manufacturing such as food processing, textile, and machine building. FAO Global predicts that the free trade agreement signed by the EU and Vietnam will create more synergies for those industries. European companies might consider moving their manufacturing sector to Vietnam, thus cutting the cost of production and expanding their distribution channels, while Vietnam companies will gain access to the most advanced technology and management in the industry from their European partners. Expect to see increased Vietnam exports in EU, and meanwhile, more European companies to invest in Vietnam, paving the way for more in-depth cooperation of these two economies. 

Analysis Contributed by Sophia Song, FAO Global Associate 

3. Chinese automaker teams up with Baidu – China Daily 

Our Analysis: Baidu, the leading player in the Chinese artificial intelligence industry, joined Geely Group for further AI industrial practice in automobile industry. FAO Global suggests this partnership is going to be beneficial for both sides. With prominent AI research and development abilities, Baidu will be able to collect more data from Geely to train and advance its algorithm and therefore deepen the insights about intelligent driving. Geely can upgrade its technology within the automobiles it produced and attract more customers through the partnership with Baidu. Faced with increasingly intense competition in Chinese automobile industry, FAO Global recommends that foreign automobile companies seek reliable partnerships at home and abroad in order to stand out in the market.  

Analysis Contributed by Sophia Song, FAO Global Associate 

4. Investors See Trade Truce Giving Risk Assets Short Reprieve – Bloomberg 

Our Analysis: Although the trade truce between the United States and China is looking positive, the fundamental trade conflict is still unresolved. For financial markets, it is especially turbulent. It is unlikely to reduce the expectations for Federal Reserve. Rate cuts, risk assets, stocks, commodities and emerging markets are set to rally while the safe-haven dollar, yen and Swiss franc underperform. FAO suggests businesses on both sides with exposure to China should keep an eye on the future change of trade deals as issues like intellectual property rights and technology transfer have not yet been resolved.  

Analysis Contributed by Jennifer Hsu, FAO Global Associate 

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Edits by Kelli Sullivan

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