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.
Below are some highlights you may have missed.
U.S. – China Trade
Trump Undermines Top Trade Advisor as He Pushes for China Deal – The New York Times
Our Take: Any agreement that transpires will be because U.S. President Trump and Chinese President Xi want it to. While there are certainly structural and political issues that factor into each respective decision, ultimately both leaders will be the ones to make the decision. Trump choosing to move forward with a deal without the support of the U.S. Trade Representative Robert Lighthizer, should come at no surprise. Structural changes take generations to implement and certainly more than a year of tariffs. Both nations need to move forward, and President Trump likely feels that he has made an impact and will claim a “win” with whatever deal is struck. Those expecting an “end all be all” trade deal will likely be disappointed.
Chinese Enterprises Marching Overseas Become a Key Boost to World Economy – China Daily
Our Take: This is good news for the global economy. Chinese businesses can offer products and services to other parts of the world, often providing much needed investment into underserved areas in developing nations. Even in developed economies, such as the United States and Europe, Chinese investment often drives businesses by injecting much needed capital in areas U.S. investors may find too high risk. Additionally, Chinese expertise and experience in infrastructure development, along with advances in technology are also highly sought fields for countries seeking to improve public transportation options. In many large projects, U.S. companies do not even submit bids due to low profit margins, increased competition, and higher risk of default.
China Business News
Even China Can’t Solve Carmakers’ Growth Problem – Bloomberg
Our Take: The Chinese car market is starting to mature, but there is a silver lining. A growing middle class coupled with developing tier 3 and 4 cities will allow growth to continue. However, the breakneck pace of consumer spending will likely slow since the largest portion of the population who can afford a new car may have already purchased one. Additionally, consumer behavior and attitudes towards buying and selling private vehicles is likely to influence the buying cycle differently than in the United States. There is still considerable growth opportunity in the market and U.S. companies should continue to build a foothold in China.
China’s Drive to Dominate the Electric Car Industry – CBS News
Our Take: Consumers have a wide variety of options and Chinese carmakers are chomping at the bit to take a bite out of the global market share. Chinese government policies have so far supported the purchase of these clean vehicles, offering incentives and rebates for purchasing a new electric vehicle. Additionally, government policy and support of a broader electric car infrastructure is supporting this movement. The market is large enough for domestic companies to grow exponentially before going abroad. Should a Chinese built car brand make inroads into an overseas market, local vehicle manufacturers may see slimmer margins.
Huawei Goes on Offense in the Battle for Hearts and Minds – Bloomberg
Our Take: By highlighting the United States own spotted history on privacy, Huawei is building a narrative. Taking advantage of recent shifts in foreign government attitudes towards the Chinese telecom giant, Huawei is focused on appealing to the consumer rather than fighting allegations at a political level. Seeing the excitement at Huawei’s booth firsthand at the recent Consumer Electronic Show in Las Vegas in January, our team noticed a stark disconnect between Huawei’s product image for consumers and their political struggles. Until Huawei is completely banned from doing business in global markets (and specifically in the United States), they should continue to focus on improving consumer trust and touting their unique value proposition while downplaying or addressing the accusations against their brand.
Analyst Bio’s
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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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.
