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.
China Business News
Our Take: The status of the Chinese housing market is a key indicator for the general health of the Chinese economy. After a high profit year in 2018, Evergrande clearly miscalculated its sales trajectory; with the year-on-year comparison between January 2018 and January 2019 showing a 42.5% decline. While there are constant talks about the Chinese housing bubble bursting, this news is potentially more significant given the external pressures of the U.S.-China trade war. We will see if the U.S.-China trade negotiations materialize in early 2019, and if it alleviates pressure on China’s current consumption downturn.
U.S.-China News
The U.S.-China tech war is being fought in central Europe – The Atlantic
Our Take: Beyond the U.S.-China trade war, which is centered on U.S. imports and exports, the strategic competition between the U.S. and China extends farther. In central Europe, the battle for 5G and the debate of Huawei is more varied than the U.S. narrative urging for complete decoupling. It is critically important to watch how the EU and its member countries formulate tech policies, which will directly influence the business landscape. U.S. firms should attempt to capitalize in markets wary of Huawei, by leveraging strategies that offer better U.S. alternatives and reassure users of privacy. Chinese firms should take note and continue to build trust with their consumers more so than simply offering the most competitive price.
Huawei Said to Be Preparing to Sue the U.S. Government – New York Times
Our Take: Huawei’s intention to sue the U.S. government is an indication that all other efforts have failed. It is a move essentially forcing the U.S. government’s hand to either produce hard evidence and the legal reasons behind the ban or to allow Huawei to operate as a good faith actor. The odds are still stacked against Huawei and a positive outcome is unlikely. However, this could potentially lead to a shift in attitudes and processes for dealing with Chinese firms in the United States. Good or bad, the way this plays out will be telling. The potential risk is that the lawsuit brings to light other Chinese investors and companies that may or may not have similar goals in the U.S. market. Chinese firms that desire to be part of U.S. infrastructure or telecommunications efforts should be cautious and transparent. Still, Huawei’s direction is a prime example of the benefits of democracy, being able to demand due-process when a negative action is applied to a company.
Dolce & Gabbana Is Still Paying for Insulting Chinese Women – Bloomberg
Our Take: Dolce & Gabanna’s (D&G) struggles will continue until efforts are ramped up to show humility and sincerity to Chinese consumers. Additionally, the backlash has spread from Chinese culture to women in general. The brand should redouble their good-will and public relations efforts towards China. The absence of D&G products at recent celebrity awards galas is a stark reminder of how important the Chinese market is to brands. D&G faces an uphill battle unless they pivot to a more Chinese positive image. This means taking on subject matter experts and partners who can guide their image to be more China friendly. If that does not happen, the potential for long term damage to D&G’s position in the luxury fashion market could manifest sooner than expected.
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.
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.
Tailored Analysis for your Situation
FAO Global can provide news, market, and event summaries upon request. We can provide them daily, weekly, or monthly that cover the target markets and implications for individual departments and missions.
FAO Global is Your International Partner
FAO Global provides China Consulting services, USA Market Entry, tailored business missions, and many more services to build bridges between the U.S. and emerging markets. Contact us to discuss your next international business venture or investment.
Headquartered in Washington, DC with Affiliates in China
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.
