EGS Biweekly Global Business Newsletter
Issue 4, Monday, May 18, 2020
By William (Bill) Edwards, CEO of Edwards Global Services, Inc. (EGS)
“Worry is like a rocking chair: It gives you something to do but never gets you anywhere.” humorist Erma Bombeck.
“Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.” Marie Curie
Introduction
The goal of this newsletter is to keep the reader up to date on the economic and business situation in key trading countries. We monitor 30+ countries, 25 daily international information sources and six business sectors to keep up with what is going on in this ever-changing environment. Our team on the ground covers 43 countries and provides us with updates about what is happening in their specific countries.
Please send us your input and perspectives so that we can publish a balanced view about the world every other week. Our contact information is at the bottom of this newsletter. You may opt out from receiving this biweekly global business update at the bottom of this blog.
The Focus of This Issue
This issue focuses on what is happening in 28 countries that impact consumer spending. The three themes of this issue are the continuing reopening of businesses around the world, travel openings and restrictions and a new section at the end that has links to special reports from several global information sources such as McKinsey’s May 15th ‘Short List’ of global updates at this link:
https://bit.ly/May152020newletter
The Latest GlobalVue™ Country Ranking Charts
We just issued our first quarterly GlobalVue™ country ranking since the novel Coronavirus outbreak. We’ve added a dual ranking, which first ranks countries on all parameters and then ranks countries on how they are expected to emerge post pandemic. The GlobalVue™ country ranking chart has been issued quarterly since 2001.
https://bit.ly/EGSGlobalVue052020
International Travel Updates
“Countries and destinations are continuing to implement additional health screening maries at their borders, including temperature checks, COVID-19 tests, questions on itineraries and 14-day quarantine periods.” This includes Australia, Canada, China, Hong Kong, Ireland, Japan, Malaysia, Singapore, South Korea, Spain, Taiwan and the United Kingdom.” Lonely Planet, May 15, 2020.
https://apple.news/AGD9wpcNWQNadUjlTMchQzg
China, South Korea consult Japan on easing business-travel curbs: China and South Korea have consulted Japan about easing border controls on business travelers to help revive business activities, the Yomiuri newspaper reported on Sunday without citing sources.”, Reuters, May 20, 2020
“Disneyland Shanghai reopens in test case for recovery: Strong demand from Chinese consumers as park limits visitors to less than a third of capacity. Disneyland Shanghai has reopened to a limited number of visitors kept apart by strict social distancing rules, as the group searches for a global recovery blueprint. The resumption of business on Monday after three months of coronavirus-induced closure marks the first Disney park to attempt a comeback after closure due to the Covid-19 crisis. The success of the reopening will be closely monitored as a potential model for Disney’s other venues that span from California to Hong Kong, Paris to Tokyo, as well as for other large theme parks around the world.”, The Financial Times, May 11, 2020
Emirates is resuming flights to London, Frankfurt, Paris, Milan, Madrid, Chicago, Toronto, Sydney and Melbourne on May 21st
https://apple.news/A5sXdLD01RGW3zmWhrkpvQw
Very good news for global brands in airport locations: Lagardère, the global airport brand operator announce that it has reopened retail stores at Amsterdam Schiphol airport. They have also reopened 9 Relay stores in France. 16 Relay store have now reopened in Europe.
“Lufthansa plans 1,800 round trips a week by the end of June: German flagship carrier Lufthansa on Thursday said it would be offering 1,800 round trips a week to more than 130 destinations around the world by the end of June.”, Reuters, May 14, 2020
https://apple.news/AGUw7GMGDQPGyD_bR1tWxB
“Chinese carriers restart their engines: In the first week of May, a holiday in China, capacity was scheduled to be only 10% lower than in the same period a year ago, estimates the capa Centre for Aviation, a consultancy. In America, meanwhile, it was 73% lower. As Western rivals slash flights, China Eastern this month claimed the title of the world’s biggest airline by current seat capacity, according to oag, an aviation-data firm.” The Economist, May 7, 2020
“Summer Travel Europe: Many Countries Plan To Be Open” As European lockdowns start to lift across the continent and land borders reopen, tourism is set to rise from the COVID-19 ashes in time for summer holiday travel. Countries with similar corona infection levels plan to welcome tourists, guided by strict EU safety and hygiene recommendations.”, Forbes, May 14, 2020
https://apple.news/AFBZ4Dw08QDqRef0rub1nHg
“How the Coronavirus Pandemic Will Change the Way We Travel: Trips will return, but they won’t be the same.”, Architectural Digest, May 13, 2020.
https://apple.news/APuGJmbrVS3iNXqEmkKh2zA
“Ryanair is planning to reintroduce 1,000 flights a day by July 1, with passengers undergoing temperature checks at airports to combat the spread of coronavirus. Europe’s busiest airline said today that 40 per cent of its flight schedule would be restored within seven weeks, subject to government restrictions on travel across the Continent being lifted.”, The Times of London, May 12, 2020
“9 Aspects To Consider Before Traveling Overseas Again: While being grounded by the COVID-19 pandemic, this million-mile traveler considers what’s going to be needed before he will feel safe traveling again.”, Forbes, May 8, 2020
https://apple.news/A2BBJftP9SJWfvHFYeJVEoA
Argentina
“Argentina extends quarantine for capital, relaxes elsewhere: Argentina extended until May 24 a quarantine for its capital Buenos Aires but relaxed the restriction aimed at slowing the spread of the new coronavirus elsewhere in the country, President Alberto Fernandez said on Friday.”, Reuters, May 9, 2020
Australia
“The Federal government has unveiled a thee stage plan to ease COVID-19 social distancing restrictions over the next two months, with reviews to occur at three-week intervals to assess the plan’s progress, according to a media report. Each stage will open more facilities for business, pleasure, and recreation, and increases the number of people which may gather in one place provided COVID-19 protocols including 1.5-metre physical distancing and good hand hygiene are maintained. Employees will be encouraged to continue working from home if possible. Intra- and interstate travel restrictions will also be progressively eased, but international travel beyond New Zealand and some Pacific Islands is unlikely to resume anytime soon.” Jason Gehrke, Managing Director, Franchise Advisory Centre, Brisbane
“On 26 April 2020 the Australian Government launched the COVIDSafe app to assist with contact tracing of COVID-19 cases in the community. Since its release more than 5.3 million Australians have downloaded the app.”, MST Lawyers, mst.com.au
“Australia’s biggest beer drinkers prepare for the end of lockdown with 300,000 pints: Australia’s thirsty far north is preparing for the party of the decade as a convoy carrying 175,000 litres of beer — 300,000 pints — heads there for the reopening of pubs next week. The Northern Territory capital, Darwin, whose population of 132,000 are Australia’s biggest beer drinkers, is expected to be the first to emerge from the coronavirus lockdown. Michael Gunner, the territory’s chief minister, ordered his office to arrange a huge road convoy that is trucking beer the 1,600 miles from Adelaide to Darwin in readiness for the expected opening of pubs next week.”, The Times of London, May 8, 2020
Brazil
“Our president is allowing reopening flexibility, but not every city is making use of it. Today’s headlines say that contamination in our city, Belo Horizonte, is 10x slower than São Paulo due to social isolation.” Ursula Aleixo, Business Director, Fastdezine Team, Bello Horizonte
Cambodia
“Thailand’s CP Group will oversee the Cambodian debut of 7-Eleven convenience stores next year under a master franchise agreement with 7-Eleven Inc, the US subsidiary of 7-Eleven Japan Co. CP All Plc, the conglomerate’s SET-listed retail arm, has concluded a deal with the US firm to operate 7-Eleven stores through CP All (Cambodia) Co beginning in 2021. The first outlet will open in Phnom Penh, a spokeswoman for the Japanese retail group Seven & I Holdings Co said.”, Contributed by Paul Jones, Barrister, Solicitor & Trade-mark Agent, Jones & Co., Toronto, Ontario
Canada
For an excellent update on the status of the provincial reopening plans for restaurants, cafes and other food service establishments across Canada, please go to the link below for the Cassels Brock law firm update:
https://bit.ly/CBCanadaReopening
“McDonald’s will restart take-out services at 30 restaurants in Canada, weeks after shutting down all of its stores in the country due to the COVID-19 pandemic, the company’s Canadian unit said.”, Reuters, May 14, 2020
“Wage Subsidy extended to the end of August: The Canada Emergency Wage Subsidy program will be extended to the end of August. The program — which covers 75 per cent of an eligible company’s payroll, up to a maximum of $847 per week per employee — originally was set to expire next month. Companies that saw their revenues drop by 15 per cent in March or 30 per cent in April and May are eligible for the program.”, Canadian Franchise Association, May 15, 2020
Mainland China
“China’s 2020 economic growth target in focus as Beijing set to convene National People’s Congress: Speculation is mounting over whether China will announce a growth target for 2020 at its annual parliamentary gathering (this coming week), after the coronavirus outbreak delayed the event and lashed the economy.”, South China Morning Post, May 6, 2020
https://apple.news/AGwO8ki6xTXmADsRyAVPMhQ
“China starts exempting some foreign business executives from its coronavirus travel ban. It’s the latest sign that China is taking steps to reopen its borders for business.”, Fortune, May 12, 2020
https://apple.news/AVaEzrvVMR4yl4TTbUtf_aQ
“China’s recovery is on course: Despite external headwinds, UBS CIO expects China’s GDP growth to recover gradually from 2Q thanks to pent-up demand and stronger policy support. UBS CIO Global Wealth Management expects infrastructure investment to be the main growth driver from 2Q, buoyed by greater funding support from larger special local government bond issuance. In 1Q, up to CNY 1.08trn of special LGBs have been issued to fund qualified infrastructure projects, and the full-year quota could reach at least CNY 3trn.” UBS report compliments of Andrew Low, CEPA, CTFA, Senior Vice President – Wealth Management, Certified Exit Planning Advisor, UBS Financial Services, Inc
The global law firm, DLA Piper, recently released a very detailed China tax and legal slide update this past week which can be viewed and downloaded at the following link:
“McDonald’s China is hosting an online job-recruitment fair for the first time as the fast-food giant eyes the addition of 1,000 new locations over the next two years. A livestreaming job fair will be held today and aims to hire and train 1,700 additional store managers to oversee new outlets. A virtual tour of the quick service chain restaurant will also be offered for potential job applicants to learn about the company’s working environment. It operates 3,500 storefronts in China’s mainland as of February this year.” Also from Paul Jones, Barrister, Solicitor & Trade-mark Agent, Jones & Co., Toronto, Ontario
https://www.shine.cn/biz/company/2005158161/
“Fast-forward China: How COVID-19 is accelerating five key trends shaping the Chinese economy: Events expected to play out in the Chinese economy over the next several years have been compressed into a short few months. Over the last few months, COVID-19 has spread across the world, uniting humanity in a shared experience that has highlighted the vulnerability of our societies. As the first country to grapple with the crisis, China has been on the frontlines both of post-COVID-19 economic recovery, and of the societal changes the pandemic has precipitated.”, McKinsey Highlights, May 6, 2020
https://apple.news/AELPrgE6qPtyv8HFJOTWW7Q
Denmark
“Fast in, first out: Denmark leads lockdown exit: Four weeks after Denmark began easing its lockdown, Danes on Monday returned to cafes and restaurants, confident that the coronavirus outbreak is under control.”, Reuters, May 18, 2020
Dominican Republic
“An article in a DR publication which included an interview with the “Father of Tourism” in the DR – Frank Rainieri. Frank is the Founder & Chairman of Grupo Puntacana, which is the #1 tourist destination in the DR, and includes hotels, villas, residences, marinas, stores, restaurants, etc. Frank said he was optimistic about the recovery of the tourism sector in the DR and in the Caribbean overall. He noted just this week alone 21 different international airlines have contacted him requesting when they can resume flights into Punta Cana (Frank owns the private Punta Cana airport, which is the country’s busiest). He expects to resume the extensive operations of the Grupo in June. Source: “Mercado Daily” digital news publication for the DR, May 7, 2020. Bob Jones, Chief International Officer, Edwards Global Services, Inc.
Egypt
“IMF approves $2.77 billion in emergency pandemic aid for Egypt. The International Monetary Fund on Monday said its executive board approved $2.77 billion in emergency financing to help Egypt grapple with the new coronavirus pandemic that has brought tourism to a standstill and triggered major capital flight.”, Reuters, May 11, 2020
“Egypt extends nationwide nighttime curfew until end of Ramadan: Egypt extended a nationwide nighttime curfew until end of the holy month of Ramadan (May 23rd) to slow the spread of the new coronavirus, Prime Minister Mostafa Madbouly said on Thursday.”, Reuters, May 7, 2020
Germany
“Apple Stores in Germany next to begin reopening on May 11: Apple Stores in Germany will be among the next to reopen after extended closures in response to the coronavirus pandemic. Following reopenings across South Korea, Austria, and Australia in recent weeks, Germany’s 15 Apple Stores will all reopen on May 11 at 11:00 A.M. Germany hasn’t mitigated coronavirus infections to the extent of other regions.”, 9T05Mac, May 8, 2020
https://apple.news/ACT4rLu_eS1mLaD6LDy9V7w
“Germany to Reopen Most of Economy in Coming Weeks as Coronavirus Recedes: Germany announced a further phasing out of its lockdown, putting itself at the front of a group of large European countries feeling their way back toward economic normality after slowing the spread of the coronavirus.”, The Wall Street Journal, May 6, 2020
https://apple.news/AEHAv626wT9Oezv_eGP-nJw
Greece
“Greece reopened the Acropolis, museums and other major tourist attractions as the coronavirus lockdown eased in bright sunshine in Athens on Monday.”, Reuters, May 18, 2020
Hong Kong
On May 13, the global U.S.-based Snap Fitness® franchise group reopened its 6 Hong Kong gyms and announced the award of another franchise for Hong Kong.
“Hong Kong business travelers prioritised in economy relaunch once pandemic is defeated. Attracting business travelers will be the top priority when Hong Kong reopens its economy to the world as part of the city’s recovery from the coronavirus pandemic, the commerce minister has said.” South China Morning Post, May 14, 2020
India
“The current Lockdown will now end on May 31st. Some restrictions will be in place though. The Government has already opened offices and shops with restriction on number of people (Like 30-40%). Trains have started to run.”, Rajeev Manchanda, Inventure India, updated May 18, 2020
“Modi unveils $266bn stimulus package to revive Indian economy: The package is equivalent to about 10 per cent of India’s gross domestic product. “Coronavirus is going to be part of our lives for a long time, but we can’t let our lives revolve around it,” he said.”, The Financial Times, May 12, 2020
Italy
“Italy will welcome foreigners to save tourism industry: Italy will open its borders to European visitors on June 3 to lure back German holidaymakers and save its tourism industry despite the threat of another wave of contagion. It is the latest in a series of steps to roll back Italy’s lockdown, which was introduced on March 10 to quell an outbreak that has killed more than 31,000 people. “We’re facing a calculated risk, knowing that the epidemiological curve could rise again,” Giuseppe Conte, the prime minister, said.”, The Times of London, May 18, 2020
“Things are slowly coming back on-line. Restaurants & Bars are open for take-out and delivery, from the 18th they will be able to welcome customers as long as they stick to guidelines: ample space for social distancing, hygiene requirements and masks, plexiglass shields and behavior manuals for staff. Similar regs apply to other businesses where people work closely together; controls on building sites have also been increased. There are strict regulations on number of people present at any one time, how many people can travel together to work, disinfecting (2 times per day), masks worn at all times, social distances when working or using communal spaces. Anyone entering the site will have their temperature measured. All workers will need to follow a hygiene/guidelines course and all areas require appropriate signage. Schools will not be reopening before September. Under Phase 2, Italians are allowed to travel within the same region and visit relatives without showing special documentation, exercise outside, hold funerals with 15 or fewer attendees, and reopen bike and scooter shops to alleviate demand on public transportation.” Andrew Shearn, ADEA Group, Milan
Japan
“Japan Largely Lifts Coronavirus State of Emergency: Japan’s Prime Minister Shinzo Abe lifted a state of emergency in much of the country outside of the capital and credited voluntary restrictions for bringing down new coronavirus infections sharply, Wall Street Journal, May 14, 2020
Malaysia
“Malaysia on Sunday extended its conditional lockdown for a further four weeks to June 9.”, South China Morning Post, May 10, 2020
Mexico
“With the economy in freefall, the question facing Mexico’s central bankers is how much to cut interest rates. Analysts are expecting a reduction of half a percentage point, to 5.5%, a four-year low. That will do little to stem the bleeding. The peso is trading near an all-time low against the dollar. (Of 42 major, national economies tracked by the Economist Intelligence Unit, our sister company, Mexico is expected to fare the worst this year.).” The Economist, May 13, 2020.
https://apple.news/AlEF9C4q5S66fTCWz1RQLLA
New Zealand
May 13th was the first day at level 2 with all shops and restaurants open. Huge queues for haircuts. Malls are also open. Schools soon. Most people continue to work from home. Stewart Germann, Stewart Germann Law Office, Auckland Please go to this link for Stewart’s latest reopening advice:
https://bit.ly/StewartGermannNZReopening
Panama
“With a high increase in the number of COVID-19 cases, the situation in Panama is not good. Some restaurants are just delivering. Gyms are closed. Hopefully at the end of May we will see more businesses operating but with lots of restrictions.”, Jose Enrique Tellez, Business Consultant, Panama City
“Panama’s Copa Airlines expects to fly 40% of its usual flights by December: Panama’s Copa Airlines expects to resume 40% of its usual flights by December, the company said on Wednesday, the latest carrier to predict a slow recovery in traffic due to the coronavirus crisis.’, Reuters, May 6, 2020
Singapore
“Singapore partly reopens despite rise in cases: Singaporeans are able to get a haircut at the barber or pop in to their favorite bakery as the government loosened restrictions.”, ABC News, May 13, 2020
“Groomed but still grounded: Hairdressers reopen during Singapore lockdown: Long queues formed outside hairdressers in Singapore on Tuesday as the government eased some restrictions of a nationwide lockdown, although any styles beyond a trim would have to wait.”, Reuters, May 12, 2020
South Korea
“‘Smart Work’ and COVID-19 Transforming the Workplace in South Korea: In February and March government agencies and companies across South Korea opted to keep workers home in what can be seen as a mass experiment with the remote work system. One issue that did not hamper work from home was Korea’s Internet infrastructure robustness even as the demand for telecommuting solutions rapidly increased. As most of Korea has returned to working on-site, the big question remains open as to whether working remotely and adopting “smart work” systems will become an option and part of the new normal.”, Don Southerton, Branding In Asia, May 11, 2020
“South Korea’s Early Coronavirus Wins Dim After Rash of New Cases: South Korea, which largely succeeded in quelling the spread of the coronavirus, is back on the defensive, with Seoul’s bars and clubs ordered closed, as the country reported its biggest one-day increase in new infections in a month.”, Wall Street Journal, May 10, 2020
Spain
“Spain aims to reopen borders to tourism in late June: Tourism-dependent Spain aims to reopen borders to visitors around the end of June as its coronavirus lockdown fully unwinds, a minister said on Monday, in a much-needed boost for the ravaged travel sector.”, Reuters, May 18, 2020
https://apple.news/AnI2QxEozTlys8AbDn52jww
“From May 11, F&B places will be able to open for terrace service (with 50% occupancy reduction) and also will be allowed to continue with their home delivery and pick-up services. From last week, they have set 3 daily separate groups to go out of the house: 1) People over 14 till 69 yrs old doing sports or walking (6am to 10am and 20 to 23h); 2) Walking the kids under 14 (12 to 19h); and 3) over 70 yrs old (10-12am and 19 to 20h). From May 11, they will allow get togethers of a maximum 10 people. Unfortunately, no news about business travelling yet.”, Tarsicio Merin, CEO, Almanor International, Madrid
“Spain will require all arriving travelers to quarantine for 14 days: Traveling to Spain in the near-term will require a mandatory period in isolation. On May 12, Spain announced that it was set to impose a mandatory 14-day quarantine for international arrivals. Beginning May 15, Spain will require that all passengers arriving from international destinations self-quarantine for two weeks.” The Points Guy, May 12, 2020
Switzerland
“This week Switzerland became the first country in Europe to end restrictions on its hospitality sector — offering a peek, albeit through the lens of the wealthy alpine state’s relatively rarefied dining scene, of what future lies ahead for restaurants, cafés and bars in a post-Covid-19 world. Restarting the hospitality sector is a key priority for Bern as the country emerges from lockdown — a message the government has pushed hard this week. More than 260,000 people are employed in the hospitality sector. In many cantons, more people work in restaurants than in shops.”, Financial Times, May 14th, 2020
Thailand
“In Bangkok, street food and takeaway alcohol are back on the menu but nightlife stays on ice. Hair salons, restaurants and even street-food stalls in Bangkok’s Chinatown came back to life this week, albeit with social distancing in place, as Thailand eased its lockdown rules and an alcohol ban after making progress in controlling the spread of the virus.”, South China Morning Post, May 5, 2020
During a recent call with Stephen Anderson, Senior Commercial Officer, and Commercial Specialist Thanyathorn Voravongsatit at the U.S. Commercial Service post in Bangkok, they mentioned ‘Thailand 4.0’. This is the government program to go from Thailand 1.0 agriculture to Thailand 2.0 light industry to Thailand 3.0 heavy industry to Thailand 4.0 Prosperity, Security and Sustainability. You can download detailed information on Thailand 4.0 at this link:
https://thaiembdc.org/thailand-4-0-2/
Turkey
“Turkey’s reopening: malls before schools: Turkey has the ninth-highest number of confirmed covid-19 cases worldwide. But the country has managed to limit the spread of the virus over the past month and so is moving to ease its lockdown. The government has already lifted travel bans in some provinces. On May 10th the elderly, who were placed under a strict curfew at the start of the pandemic, were allowed to go out for a few hours for the first time in nearly two months. Everyone else was ordered to stay home.”, The Economist, May 10, 2020
United Arab Emirates
“Dubai businesses ask for more state help to survive coronavirus. Proposals include reduction of utility costs, customs duties and expats’ residency fees. Dubai’s private sector has proposed government interventions including state subsidised loans, assistance in covering salaries and lower taxes, to help businesses survive the fallout from coronavirus. Representatives of the Gulf hub’s family-owned business community called for the government to speed up payments to contractors and suppliers and to cut sales tax from 5 per cent to 2 per cent.” Financial Times, May 12, 2020
United Kingdom
“Rishi Sunak (UK Chancellor) has announced that the government’s wage-subsidy scheme will be extended until the end of October, but employers will have to help bear the cost. The chancellor announced that from August furloughed workers will be able to return to work part-time with their wages topped up by the government. The Treasury has decided not to cut the overall level of the wage subsidy scheme, which stands at 80 per cent of people’s wages up to £2,500 a month.”, The Times of London, May 12, 2020
“McDonald’s has announced plans to reopen a further 15 restaurants on May 20th which will offer drive-thru services. Each car will be limited to a £25 order and will be encouraged to pay by contactless payment methods.”, LAD Bible, May 12, 2020
https://apple.news/AgZ7OgIAGTGeR76oDKUWvJA
“Britain’s 5.8m small businesses are in the eye of the economic storm created by the coronavirus outbreak. Entrepreneurs pride themselves on resilience and adaptability, but the past two months have thrown up challenges few could have anticipated. The government has responded with support packages providing loans, grants and equity investments for businesses of all sizes. Under the job retention scheme, the state pays 80% of the wages of furloughed workers until the end of next month.”, The Times of London, May 9, 2020
https://apple.news/AgBhcD04WR-6ASsJYbPSTBQ
“No breakfast buffet and smartphones as keys: what London hotels will be like after lockdown: Guests arriving at London’s top hotels famed for their warm welcomes are likely to have to check in online in advance and go straight to their rooms unaccompanied to help keep face-to face contact to a minimum once they reopen after lockdown.”, The Evening Standard, May 7, 2020
Vietnam
“International tourists will come (to Vietnam) but clearly in much less numbers than before. Most if not all international flights are not allowed still though this may open up in the next few weeks hopefully. The main issue is where the planes go to and come from as some countries have been hit hard and Vietnam will limit or not allow flights to/from those countries. When international flights are allowed into Vietnam, it will come with extensive testing at the airports and also 14 day quarantines for some that come from specific countries (at this point do not know who they will require quarantining). Countries like the US, UK, Italy, and Spain are likely going to require some sort of quarantining if allowed to come for the foreseeable future and until these countries can get a handle on the coronavirus.”, Sean Ngo, CEO and Co-Founder, VF Franchise Consulting, Ho Chi Minh Coty
Articles on Moving Through the COVIF-19 Times
One of the most important things that people and businesses can be doing these days is maintaining relationships around the world through calls, video conferences and email messages. We like the article by Ernesto Zuniga with the Avantiis Group at the following link on the value of global relationships:
https://bit.ly/GlobalRelationships
Recently the International Monetary Fund (IMF) published their 2020 and 2021 Gross Domestic Product (GDP) growth projections for the world in the form of two interactive maps which you can access at the link below. 2020 is not good, of course. But 2021 is projected to show high GDP growth across almost all countries.
“The Great Unwinding: Covid-19 and the regionalisation of global supply chains: A report by The Economist Intelligence Unit The coronavirus pandemic will fundamentally reshape trade, accelerating the trend towards shortening supply chains. For many multinationals, regional supply chains offer resilience and the flexibility to shift production of key components from one location to another, making it a trend that is likely to endure post-pandemic. In a world of increasing uncertainty the pandemic also raises questions around the storage of final goods and critical components”. Download this important report at this link:
https://pages.eiu.com/May-20-Businesses-and-Covid19-registration-page.html
“The world’s food system has so far weathered the challenge of covid-19.” The report at the link below is a comprehensive look at how the world’s food supply chain is performing during the COVID-19 crisis.
https://bit.ly/FoodSupplyReport
“Charting the path to the next normal: A daily chart that helps explain a changing world—during the pandemic and beyond.”, McKinsey
In Summary
There is progress in reopening business in the Asia Pacific and in Europe. The Americas and the Middle East remain largely closed down. Air travel will continue to be problematic for the next couple of months at least.
About US
Edwards Global Services, Inc. (EGS) provides a complete International solution for U.S. businesses Going Global. From initial global market research and country prioritization, to developing new international markets and providing operational support around the world. Our U.S. based executive team has living experience living and working in many countries. Our Associate network on the ground overseas covers 40+ countries. EGS is also known for our extensive country, cultural and sector research and publications, including the quarterly GlobalVue™ country ranking chart.
Find out more about the services we provide at: www.edwardsglobal.com
William Edwards is an executive with 46 years of international operations, development, executive and entrepreneurial experience and has lived in 7 countries. With experience in the franchise, oil and gas, information technology and management consulting sectors, he has directed projects on-site in Alaska, Asia, Europe and the Middle and Near East. Founded in 2001, Edwards Global Services, Inc. (EGS) takes U.S. businesses global and currently has activity in 25 countries. Our Clients are all consumer-faced brands.
William Edwards, CFE, is CEO and Global Advisor to Chief Executives, of Edwards Global Services (EGS). Contact Bill at bedwards@edwardsglobal.com or +1 949 224 3896.
Our World’s Update – Monday, March 30th, 2020
We are monitoring 22 countries, 25 daily international information sources and six business sectors to keep up with what is going on in this ever-changing environment. Based on decades of international business experience, we believe it is critical to remember two famous British sayings:
“Keep Calm and Carry On”
“Keep Calm and Breathe Deeply”
A month ago, I gave a talk to a local California business group on what life was like in a locked down China. I sited the quarantine at home for over 40 days of our Beijing based managing director and his family. His 8-year-old daughter was kept inside for these 40+ days and was going to her international school online.
This event has changed how Chinese view working from home, as they did not see this as viable before. The result of millions going to offices, is a huge number of high-rise office buildings in big cities. However, now remote work is looking good. My daughter in Cincinnati has been trying to get her company to let her work from home for years. As of today, she has been told it is mandatory to work from home through April.
By the way, our Beijing managing director’s daughter will be back at school with her friends in April. Meanwhile, my 9-year-old granddaughter in Cincinnati is just beginning her own online education from her home.
Never have we seen a disruption like the one caused by Coronavirus in our history. As of this today, “OpenTable bookings at restaurants worldwide are down by over 80% from a month ago. Retail footfall is down 50-80%, depending on the country”, Financial Times, March 22, 2020. Other franchises where customers gather like gyms are 60-100% shut down. Burger King, Dairy Queen, KFC, McDonalds and Starbucks closed over 7,500 restaurants in China last month. Today. 90% of these restaurants are back open.
Our U.S. restaurant clients have closed almost all their units worldwide – expect for China and Korea soon as well. Our clients are almost all going to remote working, clearing out their large offices around the U.S. They have also put into place a no ‘over water’ travel policy for the next three months. We are lucky that our company has been virtual for years. Not just the six of us in the U.S. working remotely, but also the 30+ members of our team on the ground around the world.
One of the groups we are working with to become the Italy licensee for one of our U.S. restaurant brand clients, owns and operates almost 100 restaurants in Northern Italy. They are 100% shutdown with hundreds of employees impacted.
As a Diamond Medallion frequent flyer with 2.5 million miles on Delta, it was interesting to read that Delta Air Lines will emerge as a “smaller” carrier, following the Coronavirus crisis, warns chief financial officer Paul Jacobson, as the airline prepares to wind down the majority of its schedule by April. “We’re going to be smaller coming out of this,” he told employees during an internal webinar last week.
Rod Young, global chairman of Cartridge World and chairman of Sydney-based DC Strategy Group, said “the wild card in looking forward for the Asia Pacific region is the Coronavirus pandemic and this is written in the expectation that the response by China and the rest of the world will see the community and the economy recover some normality after a significant impact on global growth and consumer habits.”
Our company’s associate for Southeast Asia, Sean Ngo, CEO and co-founder of VF Franchise Consulting, Ho Chi Minh City, says “people in Asia took the Coronavirus issue much more seriously earlier than in the West, because of their SARs experience in 2003 and the region is expected to gradually recover in the next – three to six months. Countries in Southeast Asia closed all international flights, while only allowing for domestic travel. The main concern in countries like Vietnam, Singapore, Thailand and the Philippines is about the virus sneaking back into these countries from international visitors.”
An AmCham China webinar from Beijing late last week had the top China-based executives of four international companies explaining how they handled the coronavirus shutdown starting in late February. They said their order of priorities were: (1) their people; (2) their internal business; (3) their suppliers; and (4) their relationships with government regulators. Wisdom for us all in these times.
This immense disruption has slowed down new business development around the world. But it is also causing companies to evaluate their businesses, in order to fine tune operations and systems and better prepare for a brighter and stronger future.
Contact me directly at bedwards@edwardsglobal.com to learn how to protect and grow your brand in the current business climate.
Keeping ahead of the wars, economic meltdowns, and political disasters
One of our jobs for our U.S. clients is to look two to three years ahead, figure out where wars will raging, where economic meltdowns will be occurring, and where political disasters are looming – then take our clients elsewhere!
The key to successful international business is constant monitoring of the economies around the world and being ready to move quickly to higher potential and calmer countries.
Why do we need to do all this? Our company exports U.S. franchise brands.
We act as an outsourced international development department for brands such as Build-A- Bear Workshop®, Denny’s®, International Dairy Queen, Lawry’s® The Prime Rib, Massage Heights®, Everlast Fitness® and Mosquito Squad®. One of our primary tasks is helping the brands prioritize the countries they enter, focusing on countries that have the highest ROI potential for the specific brand.
Recently, the CEO of one of the brands we work with told me that our job was to look two to three years ahead, figure out where the wars will be and take them elsewhere.
It turns out this is just a little bit funny – while at the same time being quite serious.
I would restate this to looking two to three years ahead not only to determine the potential for war, but also the potential for economic meltdowns and political disasters.
This is important due to the fact that it can take two to three years to find and sign a country licensee, and then another one to two years to get the first unit of the franchise open in a country.
How do we do this? Research, research and more research.
We subscribe to 25 international business data and analysis sources. We have team members on the ground in 32 countries. And our US-based executive team collectively has 120 years of international experience living and working in over 69 countries. We have a full time Director of Research who monitors our sources and watches for trends.
That being said, there are still ‘exciting’ events that change the potential for finding investors in a target country that are ready and willing to make the new investment required to acquire the license of one of our U.S. franchise brands.
Two examples are the recent United Kingdom Brexit vote and the disintegration of Turkey as a place to do business.
No one really thought about what the consequences of actually voting to leave the European Union would be. Now we are beginning to see consequences – and all is not good. Where were the adults when this was happening?
I lived in Turkey in the mid 1980s and it was a great place to reside and to work. It was the world’s only secular, Muslim democracy. Turkey had a female Supreme Court judge before the USA, and a female Prime Minister in the 1990s. Over the past 10 years, things have gradually changed, and now Turkey is no longer secular and it is not really a democracy. The Ottoman Sultan seems to have returned after 100 years. The rapid GDP growth rate is being replaced with the rapid growth of inflation. In recent weeks, inward investment has stopped, and Turkish business people are not making any new investments. Our company has closed our office in Istanbul.
On the other side of the coin is Argentina. For several decades this country has been run by poor governments that defaulted on international loans and paid foreign franchisors their royalties in soy beans. Early in 2016 a new and radically different government came into power. In a matter of a few months they settled the long standing debt problem and made the local currency float free against the dollar. New inward investment is staggering as this first world country with a highly educated population is starved for new products, services and brands. We have started marketing U.S. franchise brands in Argentina for the first time since the mid 1990s. As a local business person told me, “The U.S. dollars have come out of the Argentinean mattresses for the first time in decades.”
At the end of the day we have learned that constant research is key to looking ahead. We have also learned that there will always be surprises. The key to successful international business is constant monitoring of the economies around the world and being ready to move quickly to higher potential and calmer countries.
EGS publishes research projects related to global business development, most notably the GlobalVue™ franchise country ranking, which has been published quarterly since 2001. The latest version of this country ranking tool can be downloaded at the following link: EGS-Dual-GlobalVue-0716.pdf
William Edwards, CEO of Edwards Global Services, Inc., has 40 years of international business experience. He has lived in 7 countries, worked on projects in more than 60, and has advised more than 50 U.S. companies on international development. Contact him at +1 949 375 1896, bedwards@edwardsglobal.com, or read his blog at Geowizard.biz
A version of this blog first appeared In the Fall 2016 edition of the International Executive Resources Group (IERG) Fall 2016 ‘IERG Connect’ newsletter.
Ranking Countries as Places to Franchise Into – A Few Parameters
To enter a country, a franchisor has to find a licensee, secure trademarks, sign an international license agreement, train the new licensee, travel to their country and provide on-going support in order for the licensee to start-up and grow properly to produce royalties. Therefore, the biggest challenge a franchisor has in taking their brand global is choosing the right countries that will give them the best Return On Investment (ROI).
Some of the most important parameters the franchisor needs to know are: (1) the size of the consumer market that can afford their product or service in a country; (2) the legal environment and whether it will allow them to maintain control of their brand if a problem occurs; (3) how easy is it for a foreign company/brand to enter a country and what barriers to entry exist; (4) how easy is it to open a new business in a country keeping in mind that franchises are usually new business; and (5) what is the political and economic stability – or instability – of a country.
EGS has been evaluating and ranking countries as places to franchise on a quarterly basis since the founding of our company in 2001. We developed a tool for this – GlobalVue™. The latest issue – 2nd quarter 2014 – can be downloaded at the following link: http://edwardsglobal.com/index.php/globalvue/
EGS uses more than 25 information sources to establish and monitor these key parameters. Plus, EGS has associates under contract in 32 countries that keep us up to date on their countries. This is not a one-time evaluation, but a constant research project.
Things can change quickly in a country, taking it from being open to foreign brands and lots of local company investment to a downward market where new entries will fail. And economic parameters in a country can also begin to change for the better, which makes for opportunity for those franchises who are monitoring the world consistently.
Market size for your franchised products or services is key. Lots of people in a country does not automatically make for lots of consumers who can afford to buy your franchised products or services. Take Indonesia with a population of 240 million and a strong desire for US franchises. The consumer base for most US franchises is the middle and upper class, which is about 20% of this number. Still a significant potential market!
A few years ago the World Bank studied the occurrence of new investment by companies in a country. This is a very important parameter for franchisors because we need new investment happening to find licensees who will invest in our brands. The World Bank found that countries with annual Gross Domestic Product (GDP) growth of 4% or more are seeing new investment. 2-4% growth was ‘okay’. Less than 2% annual growth resulted in little new business creation. This makes sense and should be considered by franchisors looking at new countries to enter. If businesses are investing then we generally find consumers are also spending. This, or course, results in sales at businesses and royalties for franchisors.
Three years ago, Ireland was near the top of countries to franchise into. Today, unfortunately, their GDP growth rate is near zero and they are trying to recover from almost 20% unemployment. But Ireland is very receptive to US franchises and will come back in the future. So, it is important to keep up with global trends in order to focus your annual marketing on the countries most likely to give you a good ROI.
Another big challenge is how corrupt a country is because this directly impacts your licensee’s ability to do business and make a profit. And US companies are held responsible for how their licensees do business in their country under the U.S.’s Foreign Corrupt Practices Act of 1977.
Here are links for information on particular parameters mentioned in this blog posting.
(1) Political and economic stability can be research through these free online resources:
(2) The ease of starting a new business in a country is usually tied to the economic freedom to open a new business in a country.
www.freetheworld.com/release.html
www.heritage.org/index
www.fraserinstitute.org/programs-initiatives/economic-freedom.aspx
(3) Legal concerns are important to evaluate so you will know how easy or difficult it is to franchise in a country and whether you can protect your brand in the case of a problem.
www.franchise.org/IndustrySecondary.aspx?id=45874
(4) Corruption in a country impacts the ability of a business (franchise) to succeed. One of the best sources of information on country corruption can be found at the Transparency International website and on their Corruption Perception Index that measures more than 50 local parameters.
www.cpi.transparency.org/cpi2013/
The World Economy Is Up! No, Down!
How to Choose Where to Take Your Franchise in 2014
Recent world business headlines have swung from euphoria on the growth of the world’s economy to mild panic that the world is falling down. “Global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015”, according to the World Economic Outlook (WEO) Update: “Is the Tide Rising?”, January 2014. This source goes on to say, “In some economies, there is a need to manage vulnerabilities associated with weakening credit quality and larger capital outflows.”
There is new pessimism about the BRICS countries: Brazil, Russia, India, China and South Africa. Latin America’s growth has fallen from about 6% in 2010 to about 2.5% in 2013. Some sources ask if the BRICS are in a midlife crisis. In fact three of the BRICS – Brazil, India and South Africa – are being called part of the ‘Fragile Five” with the other two countries being Turkey and Indonesia. (Source: World Economic Forum blog by Nouriel Roubini, January 24, 2014.)
There has been a significant fall in currencies of Turkey, Brazil, South Africa, India and Russian against the dollar in recent days. “Argentina woes weigh on EM currencies”, Financial Times, January 24, 2014.
Why are these emerging markets seeing declines? Is this caused by internal economic problems? Not exactly. Russia has seen a dramatic fall in foreign direct investment (FDI) due to rule of law challenges. Brazil has seen a fall in FDI due to protectionist government policies and the extremely difficult requirements to start up new businesses in the country. South Africa has real wage and union challenges, and the central bank controls payment in hard currency. Argentina, Venezuela South, both have huge inflation and a currency that is set against the dollar at an unrealistic level. Turkey is in the 12th year of the AK Party running everything and its leaders are seeing internal problems that are not good for FDI.
China seems to be cooling off in the manufacturing sector, which means less imports of commodities from various BRICS countries. But there is evidence that the central government is working hard to turn a government sector economy into a consumer driven economy. China remains a great market to sell into. Consumer wages are increasing dramatically, as is the discretionary income of the middle class consumer. India, despite the pending elections and bureaucracy, remains a country with over 250 million middle class consumers who desire western products and services and can pay for them. But it is absolutely critical to chose the country licensees extremely carefully.
But there is general agreement that what we are seeing today is not a repeat of the 1997 Asian currency crisis. The large emerging markets are much more diverse today and their middle class consumer base is dramatically higher than is was 17 years ago. Brazil, China, India and Indonesia are now ‘Engines’ of consumer spending, not tied completely to commodity export income or the economies of the first world. With a combined middle and upper class population of more than 600 million, these countries generate a high level of consumer spending internally
So, what do franchisors seeking to sell into the BRICS+ do? I submit that you do research to find out the real cause of problems in the emerging markets and focus your efforts in 2014 on those that are least likely to interfere in their economy and most likely to welcome FDI without protectionist policies. Watch for projections of 4% or more real annual Gross Domestic Product (GDP) growth – follow ‘The Economist” magazine’s weekly analysis. The World Bank sees real economic growth and new investment when the GDP growth rate is 4% or more in a country.
http://www.imf.org/external/pubs/ft/weo/2014/update/01/index.htm
http://www.voxeu.org/article/overstated-pessimism-over-latin-america
http://forumblog.org/2014/01/brics-midlife-crisis/
http://www.economist.com/news/economic-indicators/21595021-output-prices-and-jobs
http://www.cnbc.com/id/101364841
