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 sent these assessments out via our newsletter.
Below are some highlights you may have missed.
Aircraft Manufacturers Look to Southeast Asia – The Jakarta Post
Analyst Take: One of the largest challenges posed to Western firms is competition from Japanese suppliers. Possessing advantages in regional proximity and a history of successfully boosting Southeast Asia economic growth through the automotive sector, interested parties will benefit from watching Boeing and other large firms gauge potential opportunities and partnerships. Smaller firms that are engaged in the maintenance, repair, and overhaul (MRO) service may be able to find room for expansion if they can leverage the region’s low-cost labor pool while still guaranteeing quality and safety standards.
Outline Development Plan for Greater Bay Area Brings Opportunities for Hong Kong – Xinhua
Analyst Take: Highlighting the commitment to ‘one country – two systems,’ the plan aims to reestablish Hong Kong as a hub for domestic and foreign enterprise while integrating the growing capabilities of mainland Chinese cities, such as Shenzhen, that make up the Greater Bay Area. Emphasizing technology and youth entrepreneurship, the plan likely envisions a Chinese ‘Silicon Valley’ that will help China’s long-term endeavors. The plan also is likely to integrate the vision and resources from the Made in China 2025 policy, and the Belt and Road Initiative. However, the plan comes amid an increasing shift of resources towards Southeast Asia and a slowing pace of growth in the Chinese economy. Furthermore, given the recent coverage on Huawei and a growing weariness of multinational Chinese firms, it may be challenging for Western – especially U.S. firms – to take direct part in this development. This may also provide mainland Chinese firms more access to global resources that Hong Kong has long touted.
Tesla’s China Revenue Dropped Amid the Trade War – Quartz
Analyst Take: Tesla’s declining sales in China reflects the impact of the high tariff placed on foreign auto imports, as well as the saturation and slowdown of the Chinese auto market. Comparing to how global smartphone sales declined for the first time in 2018, it may be necessary to recognize that the automotive market in China is reaching a saturation point. While this may be a temporary plateau, it certainly signals a shift in consumer behavior. Auto sales declined 16 percent in January 2019, continuing a 7-month decline, and decreasing profits for both domestic and foreign firms. Risks include current levels of market saturation and government support of domestic automakers. Opportunities include the increasing size of the middle class, slow but forward progression of market forces, and the increasing levels of disposable income in second and third tier cities that continue to grow.
Analyst Bio’s
Michael Tian: Michael Tian is currently a Junior at Brown University concentrating in International Relations and Economics with a focus on East Asia. Dedicated to understanding the global economy and its effects on inter-state relations, Michael seeks to promote mutual cooperation and foster cultural ties across cultures and space by developing informed and objective publications in both policy and academia. As a Chinese immigrant growing up in Boston Massachusetts, Michael is deeply invested in improving the livelihood of Asian-Americans and Asian immigrants – he has volunteered at various Chinese cultural associations in the Boston community, and currently tutors English to overseas Chinese students.
Brandon Hughes: Brandon is the Senior Analyst and Founder of FAO Global. He served as a government adviser and led military teams in Afghanistan, supported peace keeping operations in Europe, led corporate security teams in Las Vegas, and conducted strategic U.S.-China focused research for the prestigious Carnegie Endowment & Asia Society. Brandon leads FAO Global to conduct cross-border international business ventures between the U.S., China, and emerging markets in Asia.
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ABOUT CHINA INTELLIGENCE BRIEFS
The China Intelligence Briefs are the start of a global initiative to provide context and recommendations to businesses, non-profit organizations, and policy makers who are looking for specific examples of opportunity or disruption from global events. While analyzing the macro problems we often identify specific issues that affect our clients and readers. Identifying both opportunities & challenges allow us to better identify solutions at home and abroad for a wide range of disciplines. In addition to the China Intelligence Briefs, we maintain detailed notes from interviews, overseas trips & business missions, conferences, conventions, and private events. We provide access to these notes and other analytical products for clients and paid subscribers.
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Our Analysts, Associates, Consultants, and Interns all possess extensive experience in a foreign country and a foreign language capability. Our talent pool includes graduates from the elite Tsinghua University in Beijing, Georgetown University, George Washington University, UC Berkeley, and University of South Carolina. Being based in the Washington, DC Metro Area provides our team the advantage to build relationships with policy makers, foreign diplomats, business leaders, and non-profit groups providing a holistic view of global policy and the impacts to the business community. In addition to being based in the Washington, DC area, we retain the input and advice from affiliates located in China. This allows us to maintain on-ground awareness of changing business and political environment conditions and facilitate client projects between the two countries and the greater Asia continent.
All Intelligence Briefs are reviewed and guided by a Senior Analyst before publication.
