EGS Biweekly Global Business Newsletter Issue 101, Tuesday, February 6, 2024
Edited and curated by: William (Bill) Edwards, CFE, CEO of Edwards Global Services, Inc. (EGS)
Introduction: This year 64 countries covering 49% of the world’s population and 57% of the world’s GDP will have elections that will impact global business. The European Union is about to finalize their Artificial Intelligence Act. Has the world passed ‘Peak Child’? Growth of established Western brandcd continues in China. Red Sea challenges grow.
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The mission of this newsletter is to use trusted global and regional information sources to update our global readers on key global and local trends that can impact the success of their businesses at home and abroad.
NOTE: We subscribe to about 40 international information sources to keep our readers up to date on the world’s business. Some of the information sources that we provide links to require a paid subscription for our readers to access.
First, A Few Words of Wisdom From Others For These Times
“A people free to choose will always choose peace”, President Ronald Reagan
“Time is what we want most, but what we use worst.”, William Penn
“Even if you’re on the right track, you’ll get run over if you just sit there.”, Will Rogers
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Highlights in issue #101:
The World Has Passed ‘Peak Child’
EU Artificial Intelligence Act
Why US small businesses will lead in AI investments in 2024
Big businesses take more space in London
Big Brands Are Playing the Long Game in China
(U.K.) Business confidence at its highest for January in eight years
Brand Global News Section: Body Shop®, Pizza Inn®, School of Rock®, Starbucks® and STRONG Pilates®
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Interesting Data, Articles and Studies
2024 will see elections in 64 countries covering 49% of world’s population and 57% of the world’s GDP. These elections have the potential for major changes to economic policies in major business countries. Statista, January 2024
“Gen AI is so hot right now – The fashion industry has witnessed its share of ephemeral tech buzz, trends that disappear before they start. Generative AI, though, could have some staying power. Seventy-three percent of recently surveyed global fashion executives indicate generative AI will be a key priority for their businesses in the coming year, senior partner Achim Berg and colleagues note. And 62 percent of fashion leaders say their companies already use the technology, in areas such as online shopping assistance and writing product descriptions.”, McKinsey & Co., February 1, 2024
“The World Has Passed ‘Peak Child’ – Hans Rosling famously coined the term “peak child” for the moment in global demographic history when the number of children stops increasing. According to UN data, the world has now passed “peak child,” which is defined as the number of children under the age of five. The chart shows the UN’s historical estimates and projections of the global number of children under five. It estimates that the number of under-fives in the world peaked in 2017. Demographers expect a decades-long plateau before a more rapid decline in the second half of the century.”, Our World In Data, February 2, 2024
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Global Supply Chain, Energy, Commodities, Inflation & Trade Issues
“Falling US inflation opens door to rate cuts within months, says OECD – Price pressures in UK forecast to be highest among G7 nations over next two years. The OECD’s interim outlook, published on Monday, predicted US inflation of just 2.2 per cent in 2024 and 2 per cent in 2025 — among the lowest rates in the G7. The Paris-based organisation said that only in Italy would price growth be less this year.”, The Financial Times, February 5, 2024
“Central bankers gear up for interest rate cuts – Policymakers may need to reduce the cost of credit sooner than they convey. Milton Friedman believed the “long and variable lags” of active monetary policy made its goal of hitting an inflation target essentially unachievable. Central bankers invoked these flaws earlier in this cycle to allay fears of runaway inflation, by claiming that their rate rises would eventually come to tame it. Now that price growth has fallen rapidly, they could end up contradicting themselves by being too slow to cut rates. Caution is understandable. Central bankers fear that inflation could bounce back. Wage growth is still high by historic standards.”, The Financial Times, February 1, 2024
“On the High Seas, a Pillar of Global Trade Is Under Attack – Security crises from Red Sea to Black Sea pose a troubling question: How much has freedom of navigation been an anomaly? The modern economy rests on a rule so old that hardly anybody alive can remember a time before it: Ships of any nation may sail the high seas. Suddenly, that pillar of the international order shows signs of buckling.”, The Wall Street Journal, February 1, 2024
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Country & Regional Updates
Asia
“Factories in developing Asia may have seen the worst of manufacturing slump – South Korea’s S&P manufacturing PMI recorded a first expansionary reading since June 2022. Similar readings for Vietnam, Indonesia, the combined ASEAN, Taiwan, Malaysia and Thailand also saw improvements in January from December. In its January forecast, the International Monetary Fund said it expects emerging economies in Asia to grow 5.2% this year — a 0.4 percentage point upgrade from its forecast in October. The IMF upped its global economic growth projection to 3.1% in 2024 due to the greater-than-expected resilience of the U.S. and several large developing economies as well as fiscal support in China.”, CNBC, February 1, 2024
“IMF ups emerging Asia growth forecast, warns of China property risks but says India is a bright spot – IMF expects emerging economies in Asia to grow at 5.2% in 2024, a 0.4 percentage point upgrade from its forecast in October. It also estimates China’s economy will grow 4.6% in 2024, or 0.4 percentage point higher than the IMF’s forecast in October. Growth in India will remain strong at 6.5% in both 2024 and 2025, according to the IMF, on resilient domestic demand. The IMF also lifted its global growth forecast on the unexpected strength of the U.S. economy and fiscal support measures in China. It expects 3.1%, global growth this year, up 0.2 percentage point from its October projection, followed by a 3.2% expansion in 2025.”, CNBC, January 30, 2024
Brazil
“Volkswagen Investing $1.8 Billion in Brazil – Betting on Hybrids Carmaker plans flex, hybrids and electric models by 2028 Resources to be directed to all of brand’s factories in Brazil. The German carmaker, which wants to boost its profits in the region, announced the initiative a week after General Motors Co. disclosed plans to invest 7 billion reais in Brazil through 2028.”, Bloomberg, February 1, 2024
China
“‘Uninvestable’: China’s $2tn stock rout leaves investors scarred – Some global fund managers fear government efforts to stabilise the market are too little, too late. Chinese authorities’ promise of “forceful” measures last week was their most vocal attempt yet to halt a stock market sell-off that has wiped out almost $2tn in value. For many investors at a Goldman Sachs conference in Hong Kong, that vow was too little, too late. More than 40 per cent of those surveyed while attending a session on Chinese equities held by the US bank on Wednesday said they believed the country was ‘uninvestable’”., The Financial Times. February 2, 2024
“Big Brands Are Playing the Long Game in China – Apple, Mondelez and Procter & Gamble are bullish on consumer spending growth in China despite recent economic turmoil there. For years, the world’s biggest companies poured into China, enticed by the promise of generating hefty revenue from a growing class of consumers. China is now grappling with significant youth unemployment, dour economic forecasts and the collapse of what was once the country’s largest property developer. While U.S. executives have lamented weaker demand for some consumer products in China during earnings calls in recent weeks, a breakup is unlikely soon.”, The Wall Street Journal, February 4, 2024. Compliments of Paul Jones, Jones & Co., Toronto
European Union & Eurozone
“EU Artificial Intelligence Act — Final Form Legislation Endorsed by Member States – The long-awaited proposed AI Act, once enacted, will be a comprehensive cross-sectoral regulatory framework for artificial intelligence (AI). Its aim is to regulate the development and use of AI by providing a framework of obligations for parties involved across the entire AI supply chain. As with the General Data Protection Regulation (GDPR), the EU is seeking, through its first-mover advantage, to set the new global standard for AI regulation.”, Faegre Drinker, February 5, 2024
India
“India Cuts Tariffs to Entice More iPhone Manufacturing – Country lowering import taxes on smartphone components Move set to make assembly in India more cost-effective. ndia is reducing import taxes on several mobile-device components to boost smartphone production, a boon for companies like Apple Inc. that are increasingly considering the country as a global manufacturing base. Modi is trying to make India an electronics manufacturing powerhouse, luring global brands such as Apple away from China. At the same time, he’s trying to build an ecosystem of domestic suppliers to ensure India grabs a larger part of the value chain instead of being just an assembly location.”, Bloomberg, January 31, 2024
South Korea
“South Korea’s Exports Get off to Strong Start in 2024 – Exports from Asia’s fourth-largest economy rose 18.0% in January from a year earlier. January’s result marked a fourth consecutive month of expansion in exports for South Korea—the latest of a series of signs pointing to a recovery in global trade. Shipments grew at a stronger-than-expected pace, handily beating the median forecast from 11 economists polled by The Wall Street Journal for a 16.8% rise.”, The Wall Street Journal. January 31, 2024
Saudi Arabia
“Saudi Arabia Unveils Initiatives to Attract Global Investors and Entrepreneurs – In a strategic move to entice global investors and skilled professionals, Saudi Arabia has taken significant steps, opening its sectors to public-private partnerships, implementing new regulations for foreign companies, and launching the regional headquarters program. As part of its ambitious Vision 2030, the kingdom aims to host 480 global company headquarters by the end of the decade.”, Franchise Talk, January 22, 2024
Turkey
“Turkey still must shake off its inflation addiction – A target of low double-digit percentage price growth will do. Turkey’s devastating earthquakes one year ago horrified the nation. The disaster brought a shake-up in economic policy as well. Soaring annual price inflation, over 50 per cent, forced President Recep Tayyip Erdoğan to deal with the inflationary scourge — embracing economic orthodoxy in the form of higher interest rates.”, The Financial Times – February 5, 2024
United Kingdom
“Big businesses take more space in London – The number of companies looking for new offices in London is at its highest level in a decade, with leasing agents working to find 12 million sq ft of space for their clients. About 80 per cent of companies in the market for a new office are looking for either the same amount of space or more, Knight Frank found. However, there is a shortage of the most modern, eco-friendly office blocks that corporate renters are demanding. As such, companies are battling it out for high-end offices, rents for which are increasing quickly.”, The Times of London, January 30, 2024
“UK Border Checks on Food Begin on Brexit’s 4th Anniversary – Starting Wednesday, which marks the fourth anniversary of Brexit, health certificates will be required for medium- to high-risk foods, such as eggs for hatching, milk, cheese, fish and meat. It’s the latest stage of Britain’s split from the European Union. All this is coming just as the UK’s sticky consumer price inflation rate was finally coming down. Government officials are confident the introduction of paperwork checks will go smoothly, ahead of further physical checks to be introduced starting in April.”, Bloomberg, January 31, 2024
“(U.K.) Business confidence at its highest for January in eight years – Widespread anticipation of several interest rate cuts by the Bank of England this year has bolstered business confidence. Inflation is expected to continue its descent in the first half of this year, with several economic consultancies projecting that the rate will be back to the Bank of England’s 2 per cent target by April from its present level of 4 per cent.”, The Times of London, January 25, 2-24
United States
“Small Businesses Upbeat About 2024 Performance, Says Goldman Sachs Survey – While fundamental optimism is spreading, access to capital and high interest rates is stressing out Main Street and Wall Street. Of the 1,459 businesses that responded to the most recent 10,000 Small Businesses Voices survey from Goldman’s small business unit, 75 percent were positive about their financial prospects for the year, according to a summary released by the investment bank. The upbeat views contrast with respondents’ concerns and challenges: 71 percent said inflationary pressures increased for their businesses over the past three months, and 77 percent remain concerned about their ability to access capital.”, INC., February 2, 2024
“Why US small businesses will lead in AI investments in 2024 – A new survey of US small business owners finds that 60% seek to improve productivity and communications by allocating bigger budgets to new technologies like artificial intelligence. Small businesses employ nearly half of the entire American workforce and represent 43.5% of America’s GDP. They are a critical part of our economic ecosystem, where big businesses and small businesses are vendors, employees, partners, and customers to each other.”, ZDNET, February 2, 2024
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Brand & Franchising News
From a recent study by the International Franchise Association and FRANdata
“Under New Ownership, The Body Shop Is Shedding Most European and Some Asian Business – Financial terms of the deal, which includes both physical and digital operations, were not disclosed. The part of the activity effected equals to about 14 percent of The Body Shop’s business worldwide. The sale does not impact its global head franchise partners, which operate on a country or territory level, but some sub-franchise partners are to be included in the sale.”, WWD, February 1, 2024
“Pizza Inn and New Franchise Partner Team Up to Bring 50 New Locations to Saudi Arabia – Pizza Inn today announced a major franchise agreement with Blessings Basket Company for Serving Food to substantially expand its footprint in the Kingdom of Saudi Arabia. The 50-unit deal will kick off with the opening of the first two locations in January 2024.”, Franchising.com, February 4, 2023
“School of Rock Awards Master Franchise Agreement for Four New Countries – School of Rock announced today that Matias Puga Hamilton, School of Rock’s Latin America master franchisee, is set to double his portfolio with the brand with 13 new locations throughout Argentina, Bolivia, Ecuador and Uruguay. Beginning with a primary focus on Argentinian development, Matias Puga Hamilton awarded his first sub-franchise rights for a new School of Rock location in Buenos Aires’ northern suburbs, specifically in the Nordelta area. Sub-franchisees Roberto Sambrizzi and Fernando Tuer aim to open the school in April 2024.”, Franchising.com, February 4, 2024
“STRONG Pilates Launches in Japan – STRONG Pilate has announced the appointment of STRONG Pilates Japan (SPJ) as its master franchisee partner. Established by Chair and CEO, John B. Boardman, with extensive experience and success in the fitness market in Japan, SPJ plans to roll out 50 studios in Japan over the next 5 years.”, Franchising.com, February 4, 2024
“Starbucks stores on Chinese mainland exceed 7,000 – During a conference call on Wednesday, Belinda Wong, chairperson and CEO of Starbucks China, said that in January 2024, the company had achieved a milestone in the Chinese mainland market by surpassing 7,000 stores, while adding that Starbucks is dedicated to reaching its goal of 9,000 mainland stores by 2025. The year 2024 marks the 25th anniversary of Starbucks entering the Chinese mainland market. Wong said Starbucks will accelerate its expansion into more communities, aiming to provide high-quality coffee and the unique Starbucks experience to a broader range of Chinese customers.”, Shine.cn, January 31, 2024. Compliments of Paul Jones, Jones & Co., Toronto
This issue we are sharing an interesting franchise sector a book written by Gary Prenevost, a long-time franchise industry thought leader long-time relationship partner of ours has just been picked for USA Today’s top 10 business books to help you scale in 2024. The ‘Unstoppable Franchisee’ addresses several core operational challenges and is entirely focused on helping existing franchisees take their business to the next level. The book made the USA top 10 list and highly suggest you recommend this book to your franchisees to read as part of their growth plans in 2024.
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Our Mission, Information Sources & Who We Are
Our biweekly global business update newsletter focuses on what is happening around the worldthat impacts new trends, health, consumer spending, business investment, the franchise sector, economic development, and travel. We daily monitor 30+ countries, 40+ international information sources and six business sectors to keep up with what is going on in this ever-changing environment. Our GlobalTeam™ on the ground covering 25+ countries provides us with updates about what is actually happening in their specific countries.
William “Bill” Edwards: Global Advisor Is Uniquely Qualified to Steer Sr. Executives Successfully Through the Complex Waters of Going Global. With four decades of successful international business experience spanning virtually every corner of the world and many business sectors, Bill Edwards understands the global business landscape like no other. He has been a County Master Franchisee in five countries in Asia, Europe and the Middle East; the Senior VP for a franchisor operating in 15 countries and a full-service consultant since 2001 taking 40 franchisors global.
For a complimentary 30-minute consultation on how to take your business global successfully, contact Bill Edwards at bedwards@edwardsglobal.com or +1 949 224 3896.
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