Global Business Development

EGS Biweekly Global Business Newsletter Issue 108, Tuesday, May 14, 2024

Edited and curated by: William (Bill) Edwards, CFE, CEO of Edwards Global Services, Inc. (EGS)

Comments About This 108th Issue:  When AI capabilities will rival those of humans. Who walks, drives cars or rides buses around the world. An interesting look at rapidly changing women’s sports in the Middle East. The immense impact of vaccinations on children around the world. Renewables are now 30% of the world’s electricity. Positive news on the economies of Egypt, Indonesia, Turkey, and the United Kingdom. How America’s U.S. stocks have dominated global investing, as measured by market capitalization, for most of the past 125 years. And how life expectancies have changed over time around the world.


Edited and curated by: William (Bill) Edwards, CEO & Global Advisor, Edwards Global Services, Inc. (EGS), Irvine, California, USA. Contact Bill with any questions, comments and contributions.

Bedwards@edwardsglobal.com, +1 949 375 1896



First, A Few Words of Wisdom From Others For These Times

“I don’t like people who have never fallen or stumbled. Their virtue is lifeless, and it isn’t of much value. Life hasn’t revealed its beauty to them.” Boris Pasternak

The best way to predict the future is to create it – Peter Drucker

“Either you run the day, or the day runs you,”, Jim Rohn


Highlights in issue #108:

  • Brand Global News Section: Luckin Coffee®, McDonalds®, Nothing Bundt Cakes®, Pret A Manger®, Planet Fitness®, Yum China

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Interesting Data, Articles and Studies

Life Expectancy by Region (1950-2050F)At the beginning of the 19th century, no country had a life expectancy exceeding 40 years, with much of the global population enduring extreme poverty, limited access to medical care, and a lack of sanitation.

By 1950, newborns in Europe, North America, Oceania, Japan, and parts of South America were seeing life expectancies surpassing 60 years, while in other regions, newborns could only anticipate a lifespan of around 30 years. For instance, individuals in Norway had a life expectancy of 72 years, while in Mali, it was merely 26 years. On average, Africa had a life expectancy of only 38 years. Since then, life expectancies have substantially grown worldwide. Notably, between 1950 and 2000, significant progress was observed in Asia and Latin America and the Caribbean.”, Visual Capitalist and the United Nations, May 6, 2024


Japanese angst as India set to become 4th largest economyOnce an economic powerhouse that was the envy of much of the world, there is deep concern in Tokyo that the economies of China and Germany have already surpassed Japan’s — and that India’s will do so next year. The announcement that in 2025 India will overtake Japan in nominal gross domestic product in dollar terms has shocked Tokyo, which had until 2010 been the undisputed second-largest economy in the world but is now on the brink of slipping to fifth place. In estimates released in late April, the International Monetary Fund (IMF) indicated that India’s nominal GDP will reach $4.34 trillion (€4.03 trillion) in 2025, surpassing Japan’s $4.31 trillion.”, Deutsche Welle, May 10, 2024


Vaccines have saved 150 million children over the last 50 years – Every ten seconds, one child is saved by a vaccine against a fatal disease. Vaccination against measles has had the biggest impact, saving 94 million lives over the last 50 years — more than 60% of the total. This has been a truly global effort, with more than 5 million children saved in every region, including over 50 million in Africa and 38 million in Southeast Asia. Infant mortality rates have plummeted over the last 50 years. Globally, they’ve fallen by over two-thirds, from around 10% in 1974 to less than 3% today.”, Our World In Data, May 6, 2024



What’s the future of AI? AI is here to stay. To outcompete in the future, organizations and individuals alike need to get familiar fast. We’re in the midst of a revolution. Just as steam power, mechanized engines, and coal supply chains transformed the world in the 18th century, AI technology is currently changing the face of work, our economies, and society as we know it. We don’t know exactly what the future will look like. But we do know that these seven technologies will play a big role.” McKinsey & Co., April 30, 2024


Women’s Sports in the Middle EastFor centuries, women in the Middle East have faced significant cultural and societal barriers when it comes to participating in sports. However, times are changing, and a growing movement of passionate female athletes, advocates, and organisations are paving the way for greater inclusion and opportunities in the world of sports across the region. In this post we will have a look at how things have changed and how things are improving. With the Olympics around the corner and so many great sports initiatives in the Gulf region, let’s have a look at some of the Women Athletes making waves in the Middle East and North Africa (MENA) region….”, Middle East Sunday Pages, May 12, 2024. Article by Corina Goetz, Middle East Sunday Pages

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Global Supply Chain, Energy, Commodities, Inflation, Taxes & Trade Issues

Renewable energy passes 30% of world’s electricity supply – Report says humans may be on brink of cutting fossil fuel generation, even as demand for electricity rises. Solar was the main supplier of electricity growth, according to Ember, adding more than twice as much new electricity generation as coal in 2023. Solar was the main supplier of electricity growth, according to Ember, adding more than twice as much new electricity generation as coal in 2023. The first comprehensive review of global electricity data covers 80 countries, which represent 92% of the world’s electricity demand, as well as historic data for 215 countries. The surge in clean electricity is expected to power a 2% decrease in global fossil fuel generation in the year ahead, according to Ember.”, The Guardian, May 7, 2024

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Global & Regional Travel

How People Get Around in America, Europe, Asia – This chart highlights the popularity of different transportation types in the Americas, Europe, and Asia, calculated by modal share.  Data for this article and visualization is sourced from ‘The ABC of Mobility’, a research paper by Rafael Prieto-Curiel (Complexity Science Hub) and Juan P. Ospina (EAFIT University), accessed through ScienceDirect. The authors gathered their modal share data through travel surveys, which focused on the primary mode of transportation a person employs for each weekday trip. Information from 800 cities across 61 countries was collected for this study.”, Visual Capitalist, May 8, 2024

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Country & Regional Updates

China

The Debate Is Heating Up Over China’s Factory OutputChina’s exports rose more than expected in a boost for the economy. A growing number of countries are complaining that China produces too much cheap stuff in its powerhouse factories, and should do something about it soon. They’d better not hold their breath……..China’s economic planning agency had released a detailed rebuttal of claims about “overcapacity,” arguing that Chinese electric cars and solar panels are cheap because their producers are efficient, not because they’re subsidized.”, Bloomberg, May 9, 2024


EU Firms’ Appetite for China Investment Sinks to Record LowCompanies invest in Asean as China’s appeal fades: survey Overcapacity observed across industries, deflating prices. China is losing its luster as a top country to invest in as firms seek to avoid geopolitical risks and turn to Southeast Asia and Europe, according to a survey by the European Union Chamber of Commerce in China.Only 13% of firms surveyed earlier this year saw the country as a top destination for investments, the lowest level since records began in 2010 and down from 27% in 2021. Companies are now shifting investments to mitigate the impact of “decoupling” between China and other countries as well as to find opportunities elsewhere….”, European Union Chamber of Commerce, may 8, 2024


Egypt

Fitch revises Egypt’s outlook to positive on reduced external financing risks – In March, the International Monetary Fund approved an expanded financial support of $8 billion for the North African country. The IMF’s loan programme with Egypt should help the country gradually reduce its debt burden, an IMF official said last month. In February, the country also secured a $35 billion real estate investment from the United Arab Emirates to develop its Mediterranean coast stretch. Foreign investors have poured billions of dollars into Egyptian treasury bills since the country announced the IMF loan programme.”, Reuters, May 3, 2024


Indonesia

Indonesia Economy Expands Steadily at Start of Year, But Challenges PersistSoutheast Asia’s largest economy grew 5.11% on the year in the first quarter. Household consumption and investment, along with government spending, were among the main drivers of growth. Manufacturing—the sector that makes up the biggest share of GDP—grew 4.1% on the year in the first quarter, while the agricultural industry, which accounts for about 12% of GDP, contracted by 3.5%.”, The Wall Street Journal, May 6, 2024


Indonesia taps influencers to convince people to move to its new, under-construction capital – Social media stars are downplaying fears of deforestation and boredom in Nusantara. Four years after Indonesian President Joko Widodo announced that he would move the nation’s capital from the main island of Java to Borneo, he led a tour of dozens of influencers through Nusantara, the new capital under construction. The influencers, wearing hard hats, stood in front of a giant glass-and-chrome building in the shape of a bird — the mythological garuda or golden eagle — which will be the new presidential palace. On TikTok, Jerhemy Owen told his 3 million followers: “Nusantara will be the smartest and most eco-friendly city in the world! It will be 65% forest and 25% urban area.”, Rest Of World, April 19, 2024


South Korea

South Korea prepares support package worth over $7 billion for chip industrySouth Korea is readying plans for a support package for chip investments and research worth more than 10 trillion won ($7.30 billion), the finance minister said on Sunday, after setting its sights on winning a “war” in the semiconductor industry. Finance Minister Choi Sang-mok said the government would soon announce details of the package, which targets chip materials, equipment makers, and fabless companies throughout the semiconductor supply chain. The program could include offers of policy loans and the setting-up of a new fund financed by state and private financial institutions, Choi told executives of domestic chip equipment makers at a meeting, the finance ministry said in a statement. South Korea is also building a mega chip cluster in Yongin, south of its capital, Seoul, which it touts as the world’s largest such high-tech complex.”, Reuters, May 11, 2024


Turkey

S&P upgrades Turkey’s credit outlook on rebalanced economic strategy – Ankara is expected to take measures to streamline fiscal, monetary and incomes policies in 2024. The country’s long-term rating was raised one notch up to “B+” from “B”, with a positive outlook, the New York-based ratings agency said on Friday. A “B+” rating, which is “highly speculative”, is four levels below investment grade, according to S&P’s ratings scale. Non-investment grade makes it more difficult for a country to access capital markets and raise funding that it needs when it wants to borrow. S&P expects Ankara will take measures to streamline fiscal, monetary and incomes policies, which would include cuts to current non-wage expenditures in 2024. A return to a more orthodox policy has led S&P to ‘believe the co-ordination between monetary, fiscal, and incomes policy is set to improve, amid external rebalancing.’ ”,  The National News, May 4, 2024


United Kingdom

UK economy ‘going gangbusters’ after coming out of recession with fastest growth in two years, say expertsWe’re seeing the fastest growth for two years – the joint highest in the G7. We’ve got inflation down from over 11% to just over 3%. Mortgage rates are down from their peak. Food prices are coming down. And we’ve seen wages growing in real terms for nine months in a row. The numbers on business investment don’t lie either.  This follows major investments from the likes of Google, Microsoft, Nissan and Tata Group. It’s a huge vote of confidence in the UK.”, The Sun, May 10, 2024


Heineken to refresh hundreds of pubs with £39m (US$49m) upgradeStar Pubs reopenings and revamps expected to create more than 1,000 jobs, with new lighting and sound systems introduced to broaden their appeal. Ninety-four pubs are set for makeovers costing an average of £200,000 (US$250,000). The revamps, which come as pubgoers remain eager to go out despite the cost of living crisis, enable pubs to cater for numerous occasions and maximise events, Heineken said.  Updates planned include overhauling cellars with state-of-the-art dispense equipment and launching energy-efficiency measures such as heating controls, insulation and low-energy lighting. Heineken says these changes will cost about £12,500 (US$16,000) per pub but reduce energy use by 15 per cent.”, The Times of London, May 6, 2024


United States

“An American Century (and more) for Stocks – EVERY YEAR, CHINA GETS CLOSER to catching the U.S. as the world’s biggest economy. When it comes to their stock markets, however, there’s no contest. Since 1992, China’s GDP has grown 6.5 times as fast as America’s—but U.S. stock returns have been 3.5 times as high. Indeed, U.S. stocks have dominated global investing, as measured by market capitalization, for most of the past 125 years. For that, you can partly thank New Deal–era regulations that tamed the Wild West of U.S. markets, making them attractive to risk-averse investors worldwide. And compared with China, where state-owned companies drive the economy, the U.S. gets more growth from publicly traded companies. But supremacy can be fleeting. Just ask Japan, whose markets soared in the late 1980s, only to nose-dive amid asset bubbles and massive overborrowing. In other words: Don’t get too cocky, U.S. stock bulls.”, Fortune and UBS, May 12, 2024


There’s Not Enough Power for America’s High-Tech Ambitions – (The state of)Georgia is a magnet for data centers and other cutting-edge industries, but vast electricity demands are clashing with the newcomers’ green-energy goals. Georgia’s main utility, Georgia Power, has boosted its demand projections sixteen-fold and is pushing ahead on a hotly contested plan to burn more natural gas. Critics warn it will yield higher bills and unnecessary carbon emissions for decades. Some companies are scrambling to secure bespoke renewable-energy deals to power their development. One major source of disruption is data centers. The facilities are ballooning in size as people spend more of their waking hours online and companies digitize everything from factory processes to fast-food drive-throughs.”, The Wall Street Journal, May 12, 2024

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Brand & Franchising News

McDonald’s is betting on its mobile business with new franchisee digital marketing fund – McDonald’s will require its U.S. operators to pay into a new digital marketing fund starting next year, according to a memo viewed by CNBC. The switch is meant to modernize the company’s marketing strategy and widen its competitive advantage as it doubles down on mobile ordering and its digital business. U.S. franchisees will start paying into a digital marketing fund next year as the fast-food giant looks to expand its booming digital business, according to a memo viewed by CNBC on Thursday. The change is meant to modernize the company’s marketing strategy and widen its competitive advantage, according to the memo, which was written by U.S. Customer Experience Officer Tariq Hassan and Chief Information Officer Whitney McGinnis.”, CNBC, May 9, 2024


Planet Fitness is raising prices even as it warns customers are growing cost-consciousPlanet Fitness said it’s hiking its base-level membership prices for new customers for the first time since 1998, even as the gym operator warns that customers are growing increasingly cost-conscious.Classic card membership will be priced at $15 per month for new members starting this summer. Current members will continue to pay $10 per month “for the duration of their membership,” Planet Fitness said Thursday alongside its quarterly earnings report. The change comes after months of price testing in several markets countrywide.”, CNBC, May 90, 2024


“Luckin Coffee s revenue surged by 40 percent in the first quarter but the ongoing price war is eating away at profits – The price war that has lasted for nearly a year has an increasingly obvious impact on coffee companies. According to the announcement, in the first quarter of 2024, Luckin Coffee opened 2,342 stores, including 2 Singapore stores, bringing the total number of Luckin Coffee stores to 18,590, including 12,199 self-operated stores and 6,391 jointly operated stores……. According to the announcement, in the first quarter of 2024, Luckin Coffee opened 2,342 stores, including 2 Singapore stores, bringing the total number of Luckin Coffee stores to 18,590, including 12,199 self-operated stores and 6,391 jointly operated stores.”, Yical News, May 2, 2024. Compliments of Paul Jones, Jones & Co., Toronto


Edinburgh and Dundee set for six new Pret a Manger outlets as Scottish franchisee expands – The new store openings are expected to create at least 150 jobs. Two Scottish cities are set for three new Pret a Manger sandwich and snack outlets apiece after a franchise funding deal was agreed. Glasgow-based Joup Group has received a seven-figure financing package from HSBC UK to acquire three existing stores and open the six new ones – three in Edinburgh and three in Dundee. Joup Group already owns six Domino’s pizza franchises across Dundee and Angus.”, The Scotsman, May 10, 2024


Cake Company Seeks $240 Million Selling Franchise-Backed BondsNothing Bundt Cakes has added nearly 200 stores since 2021 Whole business securitizations already outpaced 2023’s totals. The Texas-based cake maker is borrowing in the whole-business asset-backed securities market for the third time after its initial foray in 2021, when it sold $355 million in bonds. This time, proceeds from the bond sale led by Barclays Plc will be used to refinance all of the company’s 2023-1 Class A notes and possibly to fund a payout to shareholders, according to a person familiar with the matter.”, Bloomberg, May 10, 2024


Yum China had a good start in the first quarter it has more than 15 000 stores and capital expenditures for mini stores in small towns are as low as 500 000 yuan (US$69,000). This quarter, Yum China added a net of 378 stores , passing the 15,000-store milestone . The total number of stores reached 15,022, including 10,603 KFC stores and 3,425 Pizza Hut stores. It is expected that by 2026, the total number of stores will reach 15,020,000 homes (in China).”, Caijing, April 30, 2024. Compliments of Paul Jones, Jones & Co., Toronto


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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 business environment. And our GlobalTeam™ on the ground covering 25+ countries provide 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, click on the QR code or contact Bill Edwards at bedwards@edwardsglobal.com or +1 949 224 3896. 

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China and Global Supply Chain Update May 26, 2020

William (Bill) Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 38 years, starting with living in China from late 1982 through mid 1985. He has been the Master Franchisee for a U.S. franchise in China. EGS opened an office in Beijing in 2014 and we are currently helping four U.S. brands enter the Mainland China market. Our U.S. Clients are all consumer-faced franchise brands.

The following are extracts from a variety of information sources and our network inside China.  This is bipartisan and does not reflect a point of view.

“China may become one of many hubs as companies diversify manufacturing after coronavirus shock: The coronavirus is ‘a wake-up call for pretty much every company,’ said Gerry Mattios, expert vice president at Bain. ‘The number one item on the agenda is, “how do I build resilience in my supply chain?’ ‘China is still a very attractive total supply chain solution,’ said How Jit Lim, a managing director with consulting firm Alvarez & Marsal. ‘There are very few countries in the world where you can find almost everything you need to build something.’” CNBC, May 25, 2020

https://bit.ly/Chinamanyhubs

“Coronavirus won’t kill globalisation – but a shakeup is inevitable: Globalisation relies on complex links – global value chains (GVCs) – that connect producers across multiple countries. These producers often use highly specialised intermediate goods, or “inputs”, produced by only one distant, overseas supplier. COVID-19 has severely disrupted these links…..But GVCs follow the principle of efficiency. They are the result of businesses sourcing the best possible inputs to meet their production needs at the lowest cost – wherever those inputs come from. This is good news for globalisation’s survival. While efficiency remains the main target, businesses will continue to shop globally.”, The Conversation, May 23,2020

https://bit.ly/ConversationGVCs

“European Luxury Is More Chinese Than Ever: Designer labels will need to contemplate a wave of European store closures as they become more dependent on China for sales. Chinese luxury consumers, who are almost two decades younger and less indebted than their Western counterparts, can afford to spend a larger chunk of their disposable income on designer baubles. Already there are signs of what stock analysts are calling “revenge spending” as lockdowns lift in Chinese cities and shoppers head to the mall. Consulting firm Bain estimates that by 2025, up to 49% of global luxury sales will be made to Chinese shoppers, an increase from the consulting firm’s earlier forecast of 46%.”, Wall Street Journal, May 22, 2020

https://bit.ly/EuropeanLuxuryChina

“Business travel showing signs of life in China: While the Chinese hotel industry saw a significant performance increase during the Labour Day holiday to start May, some urban markets saw continued demand after the holiday, fueled by a modest return for business travel. Business transient was also strong enough to maintain performance levels following the holiday in Shanghai, with occupancies hovering in the 30% range. While better than performance seen so far in 2020, it still lags well behind what was seen in previous years. ‘For perspective, midweek this time of year in a normal year (occupancy) is about 90%,’ said Jesper Palmqvist, area director for the Asia/Pacific region for STR.”, Hotel News Now, May 20, 2020

https://bit.ly/3cWVpZL


China Blog Update – 4/13/20

(This is an update of our March 9, 2020 China Blog)

Bill Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. He has been the Master Franchisee for a U.S. franchise in China. EGS opened an office in Beijing in 2014 and we are currently helping four U.S. brands enter the Mainland China market. Our U.S. Clients are all consumer-faced franchise brands.

Needless to say, things right now are different than ever before. The following are extracts from a variety of information sources and our network inside China on consumer-focused issues post the Wuhan Event.  This is bipartisan and does not reflect a point of view.

Employment

“The official urban unemployment rate of 6.2 per cent in February understates the true level of joblessness and doesn’t include China’s 280m migrant worker population, many of whom haven’t returned to work yet. Close to 500,000 small and medium-sized businesses, the heart of the economy, which were sidelined politically before the crisis, are reported to have failed in the first quarter alone., Financial Times, April 10, 2020

Consumers Trends

Burger King, Dairy Queen, KFC, McDonalds and Starbucks closed over 7,500 restaurants in China by the end of February. Today, over 90% of these restaurants are back open.

Our company’s Managing Director for Greater China based in China says, “the businesses of China have recovered about 60-90% depending on the region. We are still required to wear face masks everywhere and practice social distancing (which is not common in a densely-populated country). Domestic travel is still difficult because place to place travelers have to be quarantined back and forth. Retail, fitness and F&B businesses will need 3-6 months to return to normal levels as people still prefer to eat at home and order in as they did for more than 40 days in February and March. Schools and universities will not start up again until September for the new school year.

“Shopping malls and stores in China have quickly reopened as the government promotes a return to business as usual, only to see consumers stay home and keep their purse strings tight or shop online. Customer traffic is ‘less than half of usual levels’ said a worker at a Walmart store in a Shanghai suburb late last month. The government has in recent weeks highlighted a brisk recovery in business activity, touting efforts to contain the new coronavirus. Shopping centres and restaurants that had closed to stem the outbreak’s spread have rushed to reopen. About 80 per cent of restaurants and more than 90 per cent of commercial facilities have resumed business across China, according to the Ministry of Commerce. But consumers, increasingly wary of government pronouncements and state media, do not feel safe going about their business as usual” Extracts from an article by the Financial Times on April 11, 2020

Life does go on. Yum China Holdings, Inc.‘s newly-acquired controlling interest in the casual-dining brand Huang Ji Huang group, a simmer pot concept, and emerging fast-food restaurant San Fen Bao, to its portfolio. Founded in 2004 and headquartered in Beijing, Huang Ji Huang has over 640 restaurants in China and internationally. Following the acquisition, Yum China will establish a ‘Chinese dining business unit’ comprising three core Chinese dining brands: Little Sheep, East Dawning, and Huang Ji Huang. “Global Franchise’, April 8, 2020

Good news for Chinese small businesses. “Insurance companies in China are taking on an unusual mission: They are promising to cover business losses from the coronavirus pandemic, as hundreds of millions of people return to work, and the country tries to rev up its economic engine. Since February, dozens of Chinese property-and-casualty insurers have rolled out new policies or expanded existing ones to provide compensation when workers contract Covid-19, the respiratory disease caused by the new coronavirus. The insurance payouts would help companies that are forced to close temporarily if staffers fall sick, other employees have to be quarantined and business activities are disrupted. Some of the policies are provided free-of-charge by insurers, while others have low premiums that are subsidized by local governments. Many sellers of coronavirus-related coverage are state-owned insurers, which can likely fall back on state support in the event of major losses.” Wall Street Journal, April 10, 2020

Most Chinese factories are now back to operating at around 80% of capacity. Some are pushing 100%. Foxconn, the Taiwanese contract manufacturer which assembles the majority of Apple’s iPhones in China, says that with the help of tests for the virus and chest x-rays it has been able to get all its operations on the mainland back up and running with no risk to the health of its workers. In a call to investors on April 1st it reported that it was on target to provide Apple with all the 5g iPhones it needs for the launch of the device this autumn. Many of the measures that made China’s great reopening possible were boring-but-important changes to existing protocols; more hygiene measures, more separation between workers, and screening (companies in China and elsewhere are trying to get their hands on a lot of tests for sars-cov-2 infection). The Economist, April 8, 2020

“Chinese consumers are shopping again, in a timely boost for the beleaguered economy, as they regain some semblance of normal life after unprecedented lockdowns aimed at containing the coronavirus pandemic. Demand for travel, cosmetics, outdoor gear and food has surged in recent weeks as policy-driven stimulus kicked in, workers returned to offices and factories and the government started easing restrictions on people’s movement. Transport bookings rose more than 50 per cent, while hotel reservations increased by 60 per cent during the three-day tomb-sweeping Ching Ming Festival through April 6, according to Trip.com Group. Online retail orders have likewise boomed, according to e-commerce site Pinduoduo. South China Morning Post, April 8, 2020

Savills China Retail believes that China’s retail sector will fully recover by the second half of the year, once as the country has recouped from the COVID-19 pandemic, reported Retail News Asia. Entertainment centres, shopping malls, restaurants, and gyms that were affected by the government-mandated lockdown in late January are predicted to flourish post-coronavirus, as consumers cautiously retreat back to their old shopping habits. At present, shopping malls in Shanghai have 30 percent fewer shoppers compared to before the outbreak. However, starting today, malls will return to their regular operating hours, from 10 AM to 10 PM, and most retail tenants will reopen to the public.  Since the reopening, some sources have already revealed long queues outside fashion stores in IAPM mall, as well as difficulty in finding parking slots and seats at coffee shops.  Even though some restaurants have permanently closed due to the unaffordability of labour and rent costs during the outbreak, those who did survive were allowed to reopen as soon as they have reapplied.: Source: Property Guru Report, early April.

Car Sales

(Car) “quarterly sales declined 42% on year to 3.7 million vehicles, the government-backed China Association of Automobile Manufacturers said Friday. While demand started to return in March as China’s epidemic situation stabilized, sales for that month were still down 43% on year at 1.4 million vehicles. Sales had plunged 79% in February.

The rebound is already struggling to sustain its momentum. The increase in visits to dealerships trailed off in April, said Lin Huaibin, an analyst at IHS Markit, as Chinese consumers—their confidence still fragile—watched the virus ravaging the U.S. and Europe and realized the scale of the crisis facing the global economy. This fresh “demand shock” would cause auto sales to fall by about 14% this month from the same period a year earlier, Mr. Lin said, compared with a very weak April 2019, when sales fell 15% on year.

Government and Landlord Support

Just in from Deloitte:  The Chinese central government has unveiled a raft of measures to support the market amid the novel coronavirus pneumonia outbreak. The support plan for SME’s mainly includes:

  1. Easing tax burden: on individuals and corporations
  2. Financial support: increase credit supply, reduce difficulty and cost of loan applications
  3. Stability of employment: delay collection of social insurance premium.

Also, property developers/landlords, including Wanda Group, China Resources, Poly Group, Country Garden, etc. have announced waiving rent for tenants for 1-2 month durations.

Travel

 “United UAL Airlines could announce it will soon resume passenger flights to China, which is rebounding after strong measures brought the coronavirus outbreak under control. United would likely fly between San Francisco and Shanghai Pudong. Demand is increasing for United as business resumes in China and its U.S. corporate customers re-establish supply chains.” Forbes, April 10, 2020

But….” Hotel stay in Beijing only with negative corona test from April 12. In order to stay in a hotel in Beijing from April 12, guests will have to provide a negative result of a nucleic acid test that was taken within the last 7 days as well as national or Beijing health codes that show no abnormal status. China Legal Services, April 10, 2020

 In Summary

We keep our thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. We will update this China blog about every other week.

Feel free to reach out to Bill Edwards, CEO of Edwards Global Services, Inc., (EGS) to ask questions or share best practices at +1 949 375 1896 or bedwards@edwardsglobal.com.

“It is not the strongest or the most intelligent who will survive but those who can best manage change”. Darwin


The Coronavirus Impact on Doing Business in China Today – March 9, 2020

This blog is an update on the blog originally posted on February 26, 2020.

Bill Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. Our company opened an office in Beijing in 2014 and we are currently helping four U.S. brands enter the Mainland China market. Needless to say, things right now are different than ever before.

As of February 20th, all flights from the US to China and most to Hong Kong were stopped and are expected to restart until at least May. Face to face business meetings stopped in February and have mot restarted as of the date of this blog. The Chinese are learning to work remotely.

Here are some recent headlines and articles that define what is going on in China as of this date:

The Chinese government is strongly encouraging businesses to start back up in Guangzhou and Shanghai. The quarantine restriction has also been loosened on these cities. But not as much in Beijing, where the central government is headquartered.

The U.S. Faegre Drinker law firm has a China office and sent out an email on March 6th that states ‘Most employers in China are slowly getting back to somewhat normal operations, with most employees gradually returning to offices and factories. There are several things that employers should know to maximize the speed with which they can return to normal operations and continue to work in the time of the coronavirus.” This timely information is at this link:

http://bit.ly/BacktoworkinChina

The CEO of a California company with two high tech factories in Eastern China says his staff both facilities are open again and staff is gradually coming back but have to go through a 14-day quarantine period before they can work.

The business volume index of China Logistics Prosperity Index (LPI) came in at 26.2 in February, down from 49.9 in January. Fung Business Intelligence 030420

“The Caixin/Markit services purchasing managers’ index (PMI) fell over 25 index points to 26.5 in February from 51.8 in January, with the figure adjusted for seasonal factors, including the Lunar New Year. The latest figure, the first reduction in business activity across China’s service sector since the survey began in November 2005, followed the larger-than-expected deterioration in the official and private sector manufacturing sector PMIs  to all-time lows in February.” South China Morning Post (SCMP) 030420

“The value of China’s exports for January and February fell 17.2 per cent from the equivalent period of 2019 to US$292.45 billion, as virus-related production bottlenecks and the extended holiday reduced output. Imports, however, fell by only 4 per cent to US$299.54 billion, due in part to a spike in shipments of food and medical supplies.” South China Morning Post (SCMP) 030720

Manufacturing activity in China sunk in February to its lowest level since managers were first surveyed in 2004. Wall Street Journal. 030720

“Exports to the United States plunged 27.7% in January and February to $43 billion, worsening from December’s 12.5% decline. Imports of American goods crept up 2.5% to $17.6 billion, but China still recorded a $25.4 billion trade surplus with the United States. China’s global trade balance fell to a $7.1 billion deficit for the first two months of the year.”  ABC News 030720

“China’s top eight ports, including Shenzhen and Shanghai, reported a nearly 20 per cent drop in container traffic in February from a year earlier, The eight ports account for over half of China’s trade in containers, suggesting that China’s trade last month also shrank by a fifth. SCMP 030520

“Starbucks® said the virus had reduced revenue expectations in its second-biggest market by at least $400 million for its current quarter. They expect same-store sales to drop 50% in its second quarter in China, as opposed to the 3% growth previously expected.”  Wall Street Journal   030520

It appears that the majority of Burger King®, Dairy Queen®, KFC, McDonald’s® and Starbucks® stores in China have reopened except in Hubei province (Wuhan),

We daily keep our thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. Contact Bill Edwards directly at bedwards@edwardsglobal.com or on +1 949 224 3896


An Update on the Coronavirus Impact on Doing Business in China Today

Bill Edwards, CEO of EGS, has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. Our company opened an office in Beijing in 2014. Our company is currently helping four U.S. brand enter the Mainland China market. Needless to say, things right now are different than ever before

Here are some recent headlines and analysis that define what is going on in China today:

As of this date, all flights from the US to China and most to Hong Kong have stopped. Business meetings stopped 2+ weeks ago. The Chinese are learning to work remotely.

“China Passenger Car Association said sales fell to just 4,909 units in the first 16 days of February, from 59,930 in the same period in 2019”, South China Morning Post (SCMP), 022120

“China app downloads surge due to coronavirus outbreak Deadly epidemic has left tens of millions of people confined to their homes”, Financial Times 021920

“Coronavirus a boon for China’s tech-savvy supermarkets as homebound customers switch to online grocery orders”, SCMP 022120

Burger King®, Dairy Queen®, KFC, McDonald’s® and Starbucks® closed a total of over 7,500 stores in China in late January or early February.

“McDonald’s has implemented contactless pickup and delivery of Big Macs, fries and other menu items across the China. Customers order remotely and employees seal the meals in bags and put them in a special spot for pickup without human contact.” Reuters 021820

Some feedback from business contacts in China:

“We have been inside our Beijing home for over a month. Only one adult is allowed out every other day. Our temperature is checked by a guard on the way our and on the way back in. Our 8-year-old daughter has not been to school in a month and we have run out of videos for her. Our local grocery store now comes to our housing compound.”, Our company’s Managing Director for Greater China based in Beijing.

“Thanks so much for the nice email and your concerns, Bill. The Coronavirus has essentially stopped inbound/outbound movement and that’s not good for business. All of our staff are doing fine and no one so far has been affected. Many of us try to work remotely as much as possible and avoid crowds, subways, and restaurants.” Message from the Managing Partner of a Shanghai legal firm. 022220

But things are starting to change:

“China’s biggest factories are offering bonuses and the government has laid on planes, trains and buses to ferry people back to work.” Financial Times 022520

“Apple reopens more than half its retail stores in China after coronavirus closures. Apple’s store website shows 29 of 42 locations are opening”. SCMP 022520

With over 37 years of experience of doing business in China, I’m happy to discuss these business ramifications and solutions. I keep my thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. Contact me directly at bedwards@edwardsglobal.com or on +1 949 375 1896


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