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 8-12, 2019
1. China’s electronics information manufacturing reports higher revenue, shrinking profit in Jan-May – China Daily
Our Analysis: China’s electronic information manufacturing industry is seeing increased revenue (6.4% this year) but less profit due to rising costs. Although the rise in revenue is a good signal for this industry due to the increased demand for the products, it is also critical for the companies in this industry to find ways to cut costs when considering their long-term development and harsh competition in this industry. FAO Global recommends that China’s electronic information manufacturers continue to invest in technology and create flexible product lines, but also look at capabilities in Southeast Asia and Philippine markets for development. Companies should also consider cross-training employees, therefore improving and diversifying their skills and gaining leverage in a competitive market.
Analysis contributed by FAO Global Associate Sophia Song
2. HP, Dell and Microsoft look to join electronics exodus from China – Nikkei Asian Review
Our Analysis: Despite the trade truce between the United States and China, increasing labor costs, the dislike from U.S. customers, and slower economic growth in China, many technology companies are considering moving their production lines from China to Taiwan, Thailand, Vietnam and other Southeast Asian countries. The changing strategies from the world’s biggest computer and game console brands show China’s hiked production costs have already led to a decline in global orders. As the cost and risk to manufacture technology products in China rise, FAO Global reminds tech companies to consider alternate locations to develop. Southeast Asia has a growing tech capability and will likely see new competitive hubs in coming years for electronics production, in order to reduce risks for the long term.
Analysis contributed by FAO Global Associate Jennifer Hsu
3. US tech provider Stripe eyes growth in Asia’s fragmented digital payments market – South China morning post
Our Analysis: Stripe, a payment infrastructure company, is developing its presence in the Asia-Pacific, where digital payments are becoming increasingly popular. Although the digital payment market has challenges for foreign-tech companies that want to enter, there are still huge potential opportunities. Digital payment companies should seek opportunities to combine online and offline marketing that could provide a clearer picture of customer’s shopping patterns. Artificial intelligence is another market that FAO Global suggests digital companies take into consideration as customer’s activities would generate abundant data to advance the AI algorithm.
Analysis contributed by FAO Global Associate Sophia Song
4. New energy car sales surge in China – China Daily
Our Analysis: China has witnessed a decline in the sales of passenger cars, while new energy car sales have climbed nearly 50% year-on-year. This change signals Chinese customers’ shift in their car consumption behaviors due to the nature of new energy cars which are more environmental-friendly and cheaper long-term. With the dramatic increased demand and sales of new energy cars in China, FAO Global suggests that foreign competitors emphasize marketing as a growing strategy by presenting customers the newest technology of new energy cars in marketing campaigns. While marketing new energy cars, FAO Global wants to remind car-manufacturing companies to take care of possible cannibalization of their other products such as the passenger vehicles while marketing the new energy cars.
Analysis contributed by FAO Global Associate Sophia Song