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 June 17-21, 2019.

---

United States suspends WTO intellectual property litigation against China – Reuters 

Our Analysis: The decision to suspense litigation in the World Trade Organization (WTO) may be an indicator of positive moves towards a trade agreement between the United States and China. This comes ahead of an upcoming G20 summit in Japan. U.S. and Chinese officials are expected to re-engage in more collaborative discussions at the summit, with a best-case scenario being an agreed path forward.  The “quiet” suspension of the litigation falls in line with likely preferences China would request to set conditions for qualitative discussions. What this means for western firms is that a potential agreement is still on the table but will not likely be substantive in the beginning stages. 

Airlines Try New Ways to Build Pilot Ranks – New York Times 

Our Analysis: The aviation industry in China is set to boom. More airports, more travelers, and more accessibility in choice of airlines and locations are all factors that will support the growing industry. China has already capitalized on low-price flights to Asia with long layovers in China. With China’s booming economy, more people are traveling which is causing an even bigger demand. Becoming a pilot is a rigorous process, and the airline industry is close to facing a global pilot shortage. Companies in the industry should work towards recruiting new candidates, particularly women, to keep up and to get ahead.  

Tesla’s Chinese challenger Xpeng rolls out 10,000th SUV as electric vehicles chip away at China’s car market – South China Morning Post 

Our Analysis: Leveraging government subsidies of [in this case] 22%, China’s government continues to drive demand for electric vehicles. This demand is causing the growth of the electric vehicle (EV) market despite overall contraction in China’s auto sector. The EV market is still highly competitive and there is yet to be a dominant leader. The opportunities to integrate or invest in the EV supply chain are massive. Once the market corrects, assuming the subsidies do not last forever, there will likely be consolidation of efforts. This means that many of the smaller less profitable ventures will either merge or fail. Western firms in the supply chain can integrate and leverage strategic partnerships with market leaders. 

China, Hong Kong shares surge on news of Trump and Xi’s agreement to talk trade at G20 – South China Morning Post 

Our Analysis: The conditions are set for some sort of U.S.-China trade agreement at the upcoming G20 summit in Japan. Chinese President Xi Jinping signaled his interest to meet U.S. President Donald Trump just days after the U.S. agreed to suspend litigation against intellectual property in the World Trade Organization (WTO). We assess that a U.S.-China trade deal will likely include a reduction in some tariffs and an agreement to stabilize issuing of new tariffs. There will likely be a non-binding agreement on improvement of

---

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.