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 May

---

Dubai’s Emaar inks deal to develop mega project in Beijing – Arabian Business 

Analyst’s Note: China and Dubai have long been interconnected in the aviation space. This agreement, while not yet executed, continues to showcase a long history of working together on joint projects. This also highlights potential opportunities for western businesses to collaborate on the new Beijing-Daxing Airport. China’s rising middle class and growing aviation segment will be served by additional retail, dining, and shopping experiences. This will likely provide a boost for the luxury and private jet industries as well. U.S. firms in the aviation sector should anticipate follow-on amenities and be targeting the aviation elite in Dubai, just as much as Asia. 

China Gears Up to Weaponize Rare Earths in Trade War – Bloomberg 

Analyst’s Note: It is very easy to take for granted the vast quantity of materials that go into even the smallest products. From a policy perspective, there has always been a give and take between balancing economic ties with political issues. China is unlikely to institute a complete ban, but we may see secondary measures on specific items that filter into the U.S. defense community being implemented. China’s goal is to become self-reliant and diversify their own levels of political & economic risk from the United States. U.S. businesses can still operate in China and Chinese businesses are welcome in the U.S. with a few exceptions. For U.S. businesses with operations, or plans to have operations in China, we recommend you chart a path with alternate options in case your China path suddenly closes. While this is the 1% option, you want to be able to react quicker than the competition. 

China’s Baoshang Bank taken over for 1 yr on ‘serious credit risks’ – Asia Times 

Analyst’s Note:  It’s unclear if this is a single incident tied to the disappeared (allegedly detained) banker, Xiao Jianhua, or the start of broader measures intent on controlling local financial institutions in China.  Citing “serious credit risks,” the Chinese government will take control of Baoshang Bank in Inner Mongolia allowing other state-owned banks to manage operations. This may have been a legal and legitimate action by the Chinese government, but the timing does not help alleviate concerns over doing business in China. Foreign businesses facing increasing supply chain and import/export costs are wary of any indication of a depreciating business environment.  

NIO, the embattled electric car company, is getting a big bailout from Beijing – Quarts (via Yahoo News) 

Analyst’s Take:  NIO’s quick rise, quicker fall, and subsequent bailout highlights the complexities of the new energy vehicle market (NEV) in China. Largely driven by top-down subsidies, the NIO only captured 1% of the electric vehicle market and contends with an over saturation of NEV makers as well as the depressed economic factors influenced by the U.S.-China trade war. NIO vehicles have been hailed by foreign dignitaries and featured on popular T.V. and streaming sites such as “The Grand Tour” on Amazon. However, despite NIO’s qualitative success, its business has been hit hard. The joint venture with the government owned, Beijing E-Town International Investment and Development company (E-Town Capital), will potentially provide enough cashflow to see NIO through the turbulent times. If it does and the economy and buying habits pick up, NIO offers a prime contender to other luxury NEV competitors, a source of pride in China. 

---

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.

Edits by Kelli Sullivan.

---

Analysis Tailored to 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.