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 05-09 August.

1. Huawei’s Phone Sales in China Get Patriotic Boost – Wall Street Journal 

Analyst Take: Huawei’s sales in China are booming domestically despite widening restrictions and hesitations from international telecommunication giants. Although Huawei has said that its phones should not be considered patriotic, domestic sales are up. Even though Google services are banned on devices made by Huawei, this does not impact the Chinese. Due to government restrictions on Google and other western websites in China, most Chinese use apps such as WeChat. Despite this not being an issue in China, FAO Global predicts that Huawei’s offerings in countries where people are dependent on Gmail and Google’s search engines may be unfavorable. Huawei should plan to localize their offerings to be more in line with local needs in Europe and the rest of the Asian market. For a large Chinese company like Huawei, FAO Global recommends expanding through Mergers & Acquisitions in which the they can develop services of Google to capture more market share globally.  

Analysis contributed by FAO Global Associate, Sophia Song

2. Audi reports historic high sales in Jan-July – China Daily 

Analyst Take: The sales of Audi, one of dominant luxury brands in Chinese car market, are soaring up 6.1 percent from a year earlier. The increased sales indicate that higher end cars are selling despite an automotive market contraction overall. This is likely attributed to Audi’s long history in China (many government vehicles are Audi) and the rapid development of the Chinese economy’s rise of disposable income from individuals. Witnessing the success of Audi, FAO Global reminds auto makers in China, particularly in the luxury space, to continue focusing on image and reputation since brand image is crucial to success in China. Chinese consumers often view brand name with more importance than the product itself. Brand image is an important factor when Chinese customers make decisions. Diversifying product lines and developing different car models also plays an important role. This can help increase revenue due to the highly competitive market and different needs of customers. 

Analysis contributed by FAO Global Associate, Sophia Song

3. NetEase Youdao launches new products to tap online education sector – China Daily 

Analyst Take: China’s education space is booming and is expecting to continue booming for the next decade. It is doing this mainly by leveraging new technologies to scale and expanding the availability of education. In China, online education is now very popular and has a very large customer base due to the demand and competitiveness in the current Chinese job market. People see online education as a convenient and relatively cheap way to learn new skills and explore self-interests. Right now, the most advanced and developed education systems are viewed by many to come from the United States and Europe. FAO Global sees abundant opportunities for collaborations between foreign education sectors and Chinese companies. Foreign firms can serve as a medium for this cooperation to happen. 

Analysis contributed by FAO Global Associate, Sophia Song

4. Australian companies set sights on elderly care sector in China – China Daily 

Analyst Take: The aging population of China is creating new opportunities in the healthcare industry as many hospitals face overcrowding. Companies in Australia are assessing options due to an advanced healthcare and aged care infrastructure and well-developed system. For Australian and U.S. companies seeking to grow in this industry, the Chinese market will be key. FAO Global predicts that the rise of middle-class in China will require high quality services in the aged care industry. The change of demographic structure from aging in China will provide many investment opportunities in the health care and aged care industry. This will include advancing medical systems, training workforce, and building communities.  

Analysis contributed by FAO Global Associate, Sophia Song

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Edits by Kelli Sullivan

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