Biweekly Global Business Newsletter Issue 111, Tuesday, June 25, 2024

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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

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The mission of this newsletter is to use trusted global and regional information sources plus our network of 20+ in-country Associates to update our global readers on key global and local trends that can impact the success of their businesses at home and abroad. We subscribe to about 40 international information sources to keep our readers up to date on the world’s business.  Some of the information sources that we provide links to require a paid subscription for our readers to access.  

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

“The biggest threat to your organization is the lack of imagination in your leadership” Hari Abburi .

“One day you will wake up and there won’t be any more time to do the things you’ve always wanted. Do it now.”, Paul Coelho

“Only those who will risk going too far can possibly find out how far one can go.”, T. S. Eliot

Highlights in issue #111:

• The 20 Biggest Tech Companies by Market Cap

• We’re in a new era’ of supply chain disruption, HSBC analyst says
• Southeast Asia is a top choice for firms diversifying supply chains amid U.S.-China tensions

• How the US Mopped Up a Third of Global Capital Flows Since Covid

• What managers are getting wrong about early career Gen Z talent

• India Will Need to Build 100 Million Homes This Decade Amid Rising Household Incomes

• How China’s Human Capital Impacts Its National Competitiveness

Brand Global News Section: Guzman y Gomez®, Hilton®, KFC®, Mathnasium®, McDonalds®, Quiznos®, Starbucks® and Supermac®

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Interesting Data, Articles and Studies

“The 20 Biggest Tech Companies by Market Cap – The world’s 20 biggest tech companies are worth over $20 trillion in total. To put this in perspective, this is nearly 18% of the stock market value globally. This graphic shows which companies top the ranks, using data from Companiesmarketcap.com. Market capitalization (market cap) measures what a company is worth by taking the current share price and multiplying it by the number of shares outstanding. Here are the biggest tech companies according to their market cap on June 13, 2024.  It’s clear from the biggest tech companies that involvement in AI can contribute to investor confidence. Among S&P 500 companies, AI has certainly become a focus topic. In fact, 199 companies cited the term “AI” during their first quarter earnings calls, the highest on record. The companies who mentioned AI the most were Meta (95 times), Nvidia (86 times), and Microsoft (74 times).”, Visual Capitalist, June 17, 2024

“Europe’s EV Battery Plans Are Getting Crushed by China, US – As electric-vehicle sales slow, companies including Volkswagen, Stellantis and Mercedes-Benz are scaling back or refocusing battery projects. Chinese manufacturers are slashing costs and the US is drawing away investment with lucrative subsidies. China already has excess battery-making capacity, can make cells at a fraction of the cost it takes in Europe, and has a head start on the next generation of cell technology.”, Bloomberg, June 20, 2024

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Number of Children Per Woman

“Birth rates in rich countries halve to hit record low – Steep decline in fertility will ‘change face of societies’ and affect growth prospects, says OECD Steep decline in fertility will ‘change face of societies’ and affect growth prospects, says OECD. The average number of children per woman across the 38 most industrialised countries has fallen from 3.3 in 1960 to 1.5 in 2022, according to a study by the OECD published on Thursday. The fertility rate is now well below the “replacement level” of 2.1 children per woman — at which a country’s population is considered to be stable without immigration…”, The Financial Times, June 20, 2024

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“Top 10 most expensive cities for expats in 2024 – Hong Kong retained its pole position as the world’s most expensive city for expats in 2024, according to Mercer. Asia’s biggest financial hubs have once again clinched the top spots for being the costliest cities for international workers to live in, according to Mercer.  Hong Kong was ranked as the most expensive city for expats to live in, followed by Singapore and Zurich, according to the Cost of Living City Ranking 2024. Cities in Switzerland — Zurich, Geneva, Basel and Bern — snagged four out of 10 spots. New York City ranked No. 7. The top five spots had no change from the year before, but London climbed 9 positions from No. 17 to 8. The survey compared the costs of more than 200 items in each of the 226 cities studied — including the price of housing, transportation, food, clothing, household goods and entertainment. New York City was used as the benchmark and currency fluctuations were measured against the U.S. dollar.”, June 18, CNBC

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

“This Mexican Port Is Angling to Be a Nearshoring Gateway – The Guaymas Port in Mexico is looking to reposition itself as a transport hub that officials say will accelerate nearshoring in the region. Sonora Governor Alfonso Durazo announced this week that the port in the northwest region of Mexico would be revamped under a deal signed with the Port of Antwerp-Bruges International in Belgium and backed by a $220 million investment from the federal government. Ford Motor is one of the first companies looking to take advantage. The carmaker will kick off a pilot out of Guaymas starting this week— some 2,000 cars will make their way out of the port to Chile by the end of the year. Ford estimates that switching to exporting from Guaymas will reduce highway transport by 3,300 kilometers (2,050 miles) per vehicle.”, Bloomberg, June 19, 2024

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“Ocean Shipping Prices Are Pushing Toward Pandemic-Era Highs as Congestion Swells – Disruptions from the diversions around the Red Sea violence are backing up vessels with the peak shipping season still looming. The Port of Singapore, a global hub for container lines, has been swamped, leading to long wait times for a berth and increased shipping costs. Ship backups that plagued seaports during the Covid pandemic are making a comeback, as vessel diversions because of attacks in the Red Sea trigger gridlock and soaring costs at the start of the peak shipping season. Flotillas of containerships and bulk carriers are growing off the coasts of Singapore, Malaysia, South Korea and China while ports in Spain and other parts of Europe look to dig out from container piles. Houthi rebel attacks on commercial shipping in the Red Sea, which have effectively closed the Suez Canal since the end of last year, are being felt at faraway ports as the disruptions extend voyage times, throw ships off schedule and strand sea containers. T he average worldwide cost of shipping a 40-foot container hit $4,119 the week ending June 14, according to Freightos, more than triple the cost in June last year and the highest rate since September 2022.”, The Wall Street Journal, June 24, 2024

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“Is nearshoring in fashion? Nearshoring—locating production close to consumer markets—has been a top priority for US and European apparel executives since 2016, according to McKinsey surveys. But in practice, nearshoring has remained flat, senior partner Karl-Hendrik Magnus and colleagues find. Although apparel companies are shifting sourcing away from China, production has moved primarily to other Asian countries.”, McKinsey & Co., June 12, 2924

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“Norway just loosened China’s stranglehold on rare minerals critical to the global economy—and it’s a huge win for Europe and the U.S. Norway just struck a gold mine. Well, a rare mineral mine – The Norwegian mining company, Rare Earths Norway, just uncovered the largest deposit of rare earth elements in Europe. The discovery has major implications not just for the company, which is certainly poised for a windfall, but for global geopolitics. Norway’s discovery would finally make Europe a player in the industry.   In January, the Norwegian parliament voted 80–20 to allow offshore, deep-sea mining of rare minerals in remote waters to the north of the country. Norway, which is already a major producer of oil and natural gas, would become the first country to allow its seabed to be mined for rare minerals.”, Fortune, June 11, 2024

“We’re in a new era’ of supply chain disruption, HSBC analyst says – After a series of COVID-19 pandemic disruptions, ongoing geopolitical conflicts, and now a historic year in which more than 60 countries are holding elections, supply chain managers face a growing number of challenges. ‘I would actually say that we’re in a new era,’ HSBC Americas head of global trade solutions Marissa Adams told Yahoo Finance in a video interview. ‘I don’t think that there is a normalization anymore. I think that what companies are now facing is that supply chain disruption is the new norm.’ Supply chain disruptions have always been a part of global trade, even dating back to the Silk Road, which connected trade routes in Europe, the Middle East, and Asia. However, companies in the current market are more exposed to unexpected global events, which impacts their ability to trade effectively.”, Yahoo Finance, June 16, 2024

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Global & Regional Travel

“Thailand is still attracting fewer visitors than before COVID – But its tourism sector is thriving thanks to AI, savvy marketing, and Season 3 of ‘White Lotus’. “There are three reasons for the slow recovery,” says Bill Barnett, founder and managing director of C9 Hotelworks, a Phuket-based hospitality consultancy: “China, China, and China.” The country was the largest source of tourists for Thailand in 2019, sending 11 million. But just 3.5 million Chinese visited in 2023, mostly because of China’s gloomy economy. Hotels have also cut costs by choosing not to restore positions slashed during COVID. They’ve automated repetitive tasks like check-ins. Chatbots can answer many guest inquiries, and existing staff have learned to multitask.”, Fortune, June 17, 2024

Country & Regional Updates

BRICS Countries

“Malaysia, Thailand Declare Intentions to Join BRICS Ahead of Russia Summit – (Malaysia) Prime Minister Anwar Ibrahim declared his intention to apply to the bloc after it doubled in size this year by luring Global South nations — partly by offering access to financing but also by providing a political venue independent of Washington’s influence. 

Thailand — a U.S. treaty ally — last month announced its own bid to join BRICS, named after members Brazil, Russia, India, China and South Africa. The bloc “represents a south-south cooperative framework which Thailand has long desired to be a part of,” Foreign Minister Maris Sangiampongsa told reporters last week. For countries seeking to mitigate the economic risks of intensifying U.S.-China competition, joining BRICS is an attempt to straddle some of those tensions. In Southeast Asia, many nations depend economically on trade with China while also simultaneously welcoming the security presence and investment Washington provides.”, Caixin Global, June 21, 2024

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Brazil

“Market conditions drive international airlines away from Brazil, Airbus says – Airbus executive Gilberto Peralta said in an interview last week that the reluctance from international airlines to enter Brazil was mainly due to judicial uncertainty, citing a high number of legal actions taken by Brazilian customers against airlines, as well as high fuel prices. ‘Capital barriers are gone, a foreigner could come and set up a company in Brazil, but they don’t… It’s a lot of trouble,’ he said. Brazil’s strong consumer protections make it easy for flyers to sue carriers for a range of issues, including delayed or canceled flights.”, Reuters, June 17, 2024

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Canada

“What managers are getting wrong about early career Gen Z talent – Generation Z, the demographic cohort born between 1997 and 2012, may be the most misunderstood generation in the work force. Despite their dynamic capabilities and intelligence, Gen Z professionals have gained a reputation for being ‘difficult.’ Consider a recent survey by online resume platform Resume Builder, 40 per cent of hiring managers self-reported a bias against hiring Gen Z workers. But to address these issues, a recent panel of experts at the University of British Columbia found Gen Z needs empowerment that meets their needs as individuals, rather than criticism. In this case, generational prejudice, may, more than anything, be a sign that this is a cohort of early career workers unlike any the workplace has seen before.”, The Globe and Mail, June 18, 2024

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China

“How China’s Human Capital Impacts Its National Competitiveness – China’s efforts to maintain economic growth, strengthen supply chains, develop strategic science, technology, engineering, and mathematics (STEM) sectors, and secure a modern military edge hinges on the ability to cultivate and utilize human capital. China’s ability to cultivate, attract, and retain human capital—or as Beijing more commonly puts it, national “talent”—will shape its competitiveness vis-à-vis the United States as a global power and impact the future of innovation and talent on the world stage. Inequality between urban and rural populations in China presents a critical challenge to the country’s economic productivity and opportunities to develop human capital.”, Center for Strategic and International Studies, June 17, 2024

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India

“India Beats China in Stock Performance – India’s market has boomed while China’s has slumped, and their wide valuation gap seems justified. Not many stock markets can hold a candle to the red-hot Nasdaq. India is an exception. Strong profit growth, geopolitical tailwinds and favorable demographics have presented a compelling investment case for the country. From the end of 2019 through Tuesday, the MSCI India Index surged 110%, ahead of the U.S. tech-heavy index’s 99% gain. Even more surprising, though, is how well India has fared compared with what is—for now, at least—the world’s largest emerging stock market: MSCI China is down by 30% over the same period.”, The Wall Street Journal, June 19, 2024

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“India Will Need to Build 100 Million Homes This Decade Amid Rising Household Incomes – The nation’s property market has heated up since the pandemic. About 70 million Indian households will turn eligible for home ownership over the next 10 years, which, along with people seeking to upgrade their apartments, should create requirement for as many as 100 million new houses. Real estate consulting firm Knight Frank expects the demand for homes created by rising income levels to translate into $906 billion of economic output over the next ten years.’, Bloomberg, June 12, 2024

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Malaysia

“Malaysia is emerging as a data center powerhouse amid booming demand from AI – Over the past few years, the country has attracted billions of dollars in data center investments, including from tech giants like Google, Nvidia and Microsoft.  Much of the investments have been in the small city of Johor Bahru, located on the border with Singapore, according to James Murphy, APAC managing director at data center intelligence company DC Byte. ‘It looks like in the space of a couple of years, [Johor Bahru] alone will overtake Singapore to become the largest market in Southeast Asia from a base of essentially zero just two years ago,’ he said.”, CNBC, June 16, 2024

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The Philippines

“Philippines Becomes World’s Hottest Luxury Housing Market As Developers Push Million Dollar Homes – Major real estate companies are accelerating the development of luxury residential projects in the Philippines and introducing more million dollar homes to tap resilient demand from both affluent local and foreign buyers in the world’s best-performing prime housing market.Prime residential prices in the Makati financial district and nearby towns climbed 26% in the 12 months through March 2024, the biggest jump among 44 cities tracked by Knight Frank in the Prime Global Cities report published in May. The growth can be attributed to the Philippines’ robust economic performance (among Southeast Asia’s fastest growing economies), as well as significant infrastructure investments in and around Metro Manila, according to the British property consultancy.”, June 11, 2024

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South Africa

“South Africa’s Big Chance to Move Beyond Its Past – Some South Africans are prone to saying that the country has a habit of rushing to the cliff’s edge, staring into the abyss and then stepping back.  Avoiding a civil war and negotiating the end of Whites-only rule in 1994 was one such moment. This month’s unlikely alliance between the African National Congress and its most implacable critic, the Democratic Alliance, may be another. The magnitude of the ANC’s decline in popularity means the only alternative would have been an alliance with one or both of its large populist rivals.  Negotiations over cabinet positions have only just started, and compromises need to be made in areas where the ANC and DA remain diametrically opposed.”, Bloomberg, June 22, 2024

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Southeast Asia

“Fortune Southeast Asia 500 – The region’s GDP grew more than 56% to nearly $4 trillion between 2015 to 2023, according to the International Monetary Fund. The Fortune Southeast Asia 500 debuts right as global business is starting to pay closer attention to the region. Southeast Asian economies are benefiting from supply chain diversification as rapid domestic development builds the next wave of global middle-class consumers. Our new ranking reflects the rise and fall of energy markets, multinational supply chains, and tourism in some of the world’s most dynamic economies.”, Fortune, June 22, 2024

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“Southeast Asia is a top choice for firms diversifying supply chains amid U.S.-China tensions – Southeast Asia has emerged as a top beneficiary of the “China Plus One” strategy where businesses seek to reduce the risks associated with full reliance on China’s market or supply chain. Companies, even as they maintain a presence in China, have been diversifying manufacturing operations by expanding into other countries such as Vietnam and Indonesia. ‘Southeast Asia is well-placed to benefit significantly from the China+1 phenomenon as both foreign and Chinese companies diversify their supply chains and operations,’ said Kuo-Yi Lim of Monk’s Hill Ventures. ‘Geopolitical [tensions have] accelerated these activities, which started during the Covid lockdowns’ Lim added. The ‘China Plus One’ strategy seeks to reduce the risks associated with total reliance on China’s market or supply chain through diversifying manufacturing operations, expanding into other countries even as companies’ maintain a presence in China.”, CNBC, June 23, 2024

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United Kingdom

“UK inflation hits Bank of England’s 2% target in May – The figure marks a milestone for the UK economy after the worst inflationary upsurge in a generation. The Bank of England last hit its 2 per cent inflation target in July 2021. The Office for National Statistics data, which was in line with forecasts by economists polled by Reuters, means that headline inflation in the UK is now below that of the US and Eurozone. Core inflation, which strips out food and energy, fell to 3.5 per cent in May, down from 3.9 per cent in April but still relatively high.”, The Financial Times, June 19. 2024

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United States

“How the US Mopped Up a Third of Global Capital Flows Since Covid – De-dollarization narrative swept aside by overseas investors Key question is whether policies shift, upending the dynamic. In the face of calls around the world to diversify out of the dollar in recent years, the US has nabbed almost one-third of all the investment that flowed across borders since Covid struck. An International Monetary Fund analysis sent by request to Bloomberg News shows that the share of global flows has climbed — not fallen — since a shortage of dollars in 2020 spooked global investors and the 2022 freezing of Russian assets stoked questions about respect for free movement of capital. The trend marks a major shift from the pre-pandemic days when capital poured into emerging markets, including a rapidly growing China. The big US geopolitical rival has seen its share of gross global inflows more than halve since the pandemic hit.”, Bloomberg, June 16, 2024

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“California restaurants have lost traffic since the minimum wage increase – According to new data from Placer.ai, traffic patterns in California shifted to negative compared to the national average after the minimum wage increase went into place April 1. It’s probably still way too early to understand the full impact of California’s minimum wage increase to $20 an hour on April 1. But for now, we do know several chains have raised their prices in response to that 25% increase and, so far, those increases have led to lower foot traffic. It has also led to a perception shift among consumers, 78% of whom now think of fast food as a “luxury,” according to recent Lending Tree data. As such, several brands have adjusted their strategy to be more value focused and that value is defined differently depending on market.”, Nation’s Restaurant News, June 14, 2024

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Vietnam

“Vietnam F&B industry in 2024 continues growth with new trends – The value of the Vietnamese F&B market is expected to grow by 10.92% this year compared to 2023. In 2024, the value of the food and beverage (F&B) market in Vietnam is expected to increase by 10.92% compared to 2023, generating revenues of over VND655 trillion (US$26.1 billion). Despite the economic challenges, the survey found that around 80% of businesses in Vietnam remain positive and have the resources to grow in the future, with nearly 52% planning to expand.”, VF Franchising, Ho Chi Min City, June 2024

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Brand & Franchising News

“Gen Z demand makes Guzman y Gomez the hottest (Australian) retail stock – Guzman y Gomez accounted for nearly a third of all trades on some of the country’s most popular retail platforms after it hit the ASX on Thursday, as investors rushed to buy as many shares as they could in the Mexican-themed restaurant group. Guzman y Gomez has set a target of 1000 stores in Australia.”, Australian Financial Review, June 21, 2024

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“‘Big Mac’ trademark win increases appetite for Supermac’s – as inquiries from potential franchisees in Europe flood in.  Supermac’s, the fast-food restaurant chain founded by entrepreneur Pat McDonagh, received around 50 enquiries from potential franchisees across Europe after winning a trademark case against McDonald’s. Any expansion into Europe or Great Britain would be Supermac’s first foray outside the island of Ireland.”, Irish Independent, June 15, 2024

“KFC explores new KPro store type in Shanghai focusing on healthy light meals with single items priced at 30 yuan (US$4) per person – It is reported that the menu of the Shanghai store mainly promotes five staple foods: panini, wagyu burger, energy bowl, hot bagel, and toto rolls. It also provides snacks such as chicken wings, and drinks such as yogurt shakes, coffee, cola, and lemon tea. Most of the single products are priced at more than 30 yuan, and some products are more than 40 (US$5) yuan. There are already many players in the healthy light food market, including Wagas, Super Bowl FOODBOWL, and Shaye Light Food, all of which have advantages in different price ranges. The new KPro store in Shanghai focuses on “five signature energy staple foods, all-time, easy”, “high-quality protein, frying and grilling, cooked to order”., Industry Caiking, June 17, 2024. Compliments of Paul Jones, Jones & Co., Toronto

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“What Actually Caused The Downfall Of Quiznos – The reasons are complicated — while it does seem that sub sandwiches have declined in popularity, the reason for Quiznos’ precipitous downfall seems to be more about poor management rather than changing tastes. A big issue was that it expanded too fast — its initial decade was tame, starting from one Denver store in 1981, and only growing to 18 by 1991. Then it went public in 1994, and started expanding faster: Franchisees complained that there were too many locations too close together. The stores simply weren’t selling that many sandwiches: At the chain’s peak, Restaurant Business reports that the average per-restaurant revenue was $400,000 per year, a little over $1,000 per day.”, Chowhound, June 10, 2024

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“McDonald’s scraps AI drive-thrus after customer complaints – The automated system struggled with accents and served the wrong food. McDonald’s partnered with IBM in 2021 to introduce the system, which promised to simplify and speed up operations with voice-activated ordering. It has been used in more than 100 restaurants in the US. There have been reports that the technology has struggled to differentiate between different accents, leading to incorrect orders. Customers shared videos online of the wrong orders, including the machine adding nine orders of sweet tea to one woman’s bill and adding bacon to another’s dessert. McDonald’s did not comment on accuracy or technology challenges. In a statement, IBM said its automated technology ‘is proven to have some of the most comprehensive capabilities in the industry’”., The Times of London, June 18, 2024

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“Mathnasium Expands into Romania with New Master Franchise Agreement – Mathnasium, a prominent name in math education, is set to launch in Romania following the announcement of a master franchise agreement. Led by Ms. Dana Bănică, this agreement aims to establish a minimum of 25 Mathnasium Learning Centers across Romania within the next six years, marking a significant expansion into a new market for the brand.”, VF Franchising, June 2024

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“Starbucks and Hilton marry (in mainland China) – Although they did not join the price war they rolled in the membership system. On June 20, Starbucks China announced that the Starbucks Rewards Club membership system has been upgraded. For the first time, Starbucks has joined hands with Hilton Group to jointly innovate the membership experience. From now on, members of both parties can join each other’s membership system through their respective apps and other channels to enjoy special benefits. Although it has its own rhythm, it is not difficult to see that Starbucks faces very fierce competition in the Chinese market. In the first fiscal quarter of 2024, Starbucks China’s same-store sales increased by 10% year-on-year, but the average customer spending decreased by 9% year-on-year.”, Yical. June 29, 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 world that 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. 

www.edwardsglobal.com

And download our latest chart ranking 40+ countries as places to do business at this link:

Our latest GlobalVue™ 40 country ranking

Biweekly Global Business Newsletter Issue 110, Tuesday, June 11, 2024

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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

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The mission of this newsletter is to use trusted global and regional information sources plus our network of 20+ in-country Associates to update our global readers on key global and local trends that can impact the success of their businesses at home and abroad. We subscribe to about 40 international information sources to keep our readers up to date on the world’s business.  Some of the information sources that we provide links to require a paid subscription for our readers to access.  

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

“Technological advancements are vastly overrated in the short term, and vastly underrated in the long term. All failure is failure to adapt, all success is successful adaptation.” ― Arthur C. Clarke

“Risk-taking is the cornerstone of empires.” — Estée Lauder

“The key is not to prioritize what’s on your schedule, but to schedule your priorities.” — Stephen Covey

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Highlights in issue #110:

The Dollar Is at Its Strongest Since the 1980s. Can It Last?

The Great Global Rate Cut Cycle Is Going to Be a Bumpy Ride

China economy gathers pace on back of services growth

Asia and Mideast Dominate Latest Port Performance Ranking

The world’s largest shopping mall is about to get even bigger

Irish fast food chain’s victory over McDonald’s to use Big Mac name

Brand Global News Section: Anthony’s Coal Fired Pizza & Wings®, Jimmy Johns®, McDonalds® and Starbucks®

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Interesting Data, Articles, and Studies

“The state of AI in early 2024: Gen AI adoption spikes and starts to generate value – As generative AI adoption accelerates, survey respondents report measurable benefits and increased mitigation of the risk of inaccuracy. A small group of high performers lead the way. If 2023 was the year the world discovered generative AI (gen AI), 2024 is the year organizations truly began using—and deriving business value from—this new technology. In the latest McKinsey Global Survey on AI, 65 percent of respondents report that their organizations are regularly using gen AI, nearly double the percentage from our previous survey just ten months ago.”, McKinsey & Co., May 30, 2024

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“The Great Global Rate Cut Cycle Is Going to Be a Bumpy Ride– After the steepest interest-rate tightening cycle in decades and a long holding cycle, how fast to unwind such settings is now a dominant theme. The Bank of Canada and European Central Bank both cut rates by 25 basis points in the Group of Seven’s first easing moves since the pandemic. They joined officials in Switzerland and Sweden who moved earlier this year.”, Bloomberg, June 7, 2024

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“The U.S. Global Food Security and Global Water Strategies: Increasing Coherence and Navigating Challenges – Adequate supplies of clean water and nutritious food are vital to human well-being. They are also increasingly important to U.S. foreign policy. Globally, 71 percent of all the water withdrawn from the Earth’s rivers, lakes, and aquifers is devoted to agriculture. Worldwide, food production will have to rise 50 percent by 2050 to meet the increasing demands of growing populations, prospectively requiring global water withdrawals 30 percent greater than today.”, Center for Strategic and International Studies, May 30, 2024

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

“Costs of Economic Fragmentation Include Moving to Hard-to-Work Places – Global supply chains are realigning through geopolitically neutral economies to boost resilience and hedge dependencies on the US and China. In some cases, though, shifting to new places comes with a costly drawback: extra red tape. Four of nine so-called bridge nations — a grouping Bloomberg dubbed “connectors” in an analysis last year — were among the world’s top 20 most complex jurisdictions in which to start and operate a business, according to TMF Group….Greece ranks as the most complex jurisdiction, according to TMF Group. The gauge, which ranks 79 economies based on 292 business indicators like the speed of obtaining a business license…..The ranking shows how re-globalization, while necessary to diversify sourcing in a world of geopolitical fragmentation, often moves operations to markets where companies might sacrifice productivity gains and back-office efficiencies.”, Bloomberg, May 30, 2024

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“The mounting strains on global shipping – Pirate attacks, Middle East instability and drought are causing disruption and congestion at the world’s ports.  The problems follow many shipping lines’ decisions, at the end of 2023, to reroute voyages away from the waters off Yemen after facing attacks from Iran-backed Houthi militias. Container ship arrivals in the Gulf of Aden, at the entrance to the Red Sea, are down 90 per cent on the same period last year according to data from Clarksons, the shipping services provider. Diverting vessels from Asia and bound for Europe around the Cape of Good Hope adds an additional nine to 14 days to voyage times.”, The Financial Times, May 27, 2024

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“Asia and Mideast Dominate Latest Port Performance Ranking – Global container ports got a breather in 2023 as the pandemic’s hit to supply chains eased and trade volumes stabilized after a few turbulent years. But even in a so-called normal year, labor issues, extreme weather and attacks on vessels near Yemen complicated operations at marine gateways all over the world. Despite that, more than 100 ports improved their efficiency ranking from the year before, according to a new report.”, Bloomberg, June 5, 2024

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Global & Regional Travel

“Hyatt reaches record global pipeline of 129K rooms – Hyatt Hotels Corporation has revealed that its pipeline has grown by nearly 85% since 2017, reaching a record 129,000 rooms. The company said it has doubled its luxury rooms, tripled its resort rooms and quintupled its lifestyle rooms since 2017. Additionally, the World of Hyatt loyalty program has quadrupled its membership since 2017 and was up 22% as of the end of the first quarter compared to the same period last year, reaching 46 million members globally.”, Hotel Business, June 3, 2024

“Heathrow like a Second World War airport, laments Emirates chief – Airline president Sir Tim Clark says the airport is lagging behind in terms of customer experience. The president of Emirates airlines has likened Heathrow to a dilapidated Second World War airport in terms of the experience it offers customers.  Sir Tim Clark, the boss of the UAE flag-carrier, said the airport put its shareholders and paying dividends before running a world-class business. Clark said the terminal needs to be redesigned, with the plaza reduced in size to allow more room for security and check-in. He said: ‘It’s an old airport. I’m afraid it’s very difficult. You need to open up the whole terminal. Where we are based, new airports are being built employing the latest technologies to streamline the process of all the customer-facing elements. That is not the case at Heathrow.”, The Times of London, June 3, 2024

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Country & Regional Updates

Canada

“Canada first major central bank to cut rates ahead of ECB – The Bank of Canada became the first major central bank among the Group of Seven countries to cut interest rates, opening the door for others to follow suit before the US Federal Reserve. While the Canadian central bank’s decision to cut its cash rate by a quarter of a percentage point to 4.75 per cent was widely expected, BoC governor Tiff Macklem flagged further reductions which bolstered market sentiment. Inflation in Canada has slowed this year to hit a three-year low of 2.7 per cent in April. While inflation has stayed below 3 per cent for four straight months, it is still above the central bank’s 2 per cent target.’, Australian Financial Review, June 6, 2024

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China

“Hedge fund billionaire Ray Dalio says benefits of investing in China outweigh risks  – ‘Diversification and investment in China is desirable,’ Dalio said in a virtual presentation at the Greenwich Economic Forum in Hong Kong on Wednesday. ‘Chinese assets are very attractively priced.’  There are concerns among international investors about potentially being penalised by their governments for investing in the country, with anti-China policies set to gain bipartisan support in the US election this year, he said. Meanwhile, China’s own economic problems, including its protracted real estate crisis, debt issues and the knock-on effects of those, are also making investors anxious.”, South China Morning Post, June 5, 2024

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“China economy gathers pace on back of services growth – Caixin services sector purchasing managers’ index for May jumped to 54, the highest reading since July 2023. Interest rates have been lowered, borrowing increased to lift public investment and taxes cut, all as part of a concerted effort to reverse slowing economic activity. The International Monetary Fund recently raised its GDP growth projection for China this year to 5 per cent from 4.6 per cent on the back of more policy support, matching Beijing’s 5 per cent annual target. The IMF urged the CCP to focus future policy on stimulating domestic demand rather than prioritising strategic industries.”, The Times of London, June 5, 2024

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Euro Zone

“The Eurozone Has Come a Long Way Since the 2009 Debt Crisis, but Risks Remain – In the face of the quasi-existential debt crisis, the euro area has seen major institutional reform, which have helped make the single currency more resilient. Although the euro area proved resilient in the face of recent shocks brought on by the COVID-19 pandemic and the war in Ukraine, the current institutional architecture continues to make it vulnerable to severe shocks.”, Stratfor Worldview, June 6, 2024

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Saudi Arabia

“Aramco Sale Set to Raise at Least $11.2 Billion for Saudi Arabia – Saudi Aramco’s mega stock offering is set to raise at least $11.2 billion, the biggest such deal globally in three years that will help fund the government’s multitrillion-dollar push to transform the kingdom’s economy. The proceeds will help Crown Prince Mohammed Bin Salman’s ambitious plans to revamp the economy with investments including in sports, artificial intelligence, tourism and the desert project of Neom. The kingdom’s budget has been in a deficit for six quarters, and it has raised over $40 billion from local and international markets this year to fill the gap.”, Bloomberg, June 6, 2024

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United Arab Emirates

“The world’s largest shopping mall is about to get even bigger – United Arab Emirates real estate developer Emaar Properties announced Monday plans for a 1.5 billion dirham ($408 million) expansion of Dubai Mall. The 12-million-square-foot mall is already the largest shopping center in the world by total area, and the expansion will add a further 240 luxury stores, along with new food outlets. Last year, Dubai welcomed a record number of tourists, and the mall says it received 105 million visitors last year, up 19% from 2022.”, CNN, June 5, 2024

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United Kingdom

“UK Survey of Executives Finds Confidence at Highest Since 2021 – UK businesses entered the general election campaign at their most optimistic in over 2 1/2 years after the economy quickly bounced back from recession, according to the Institute of Directors. The business lobby group said “green shoots” of recovery are “clearly visible” after its economic confidence index rose to minus 3 in May. It was up from minus 10 the previous month and the highest since September 2021 just after the economy emerged from lockdown. Business sentiment has moved into a ‘neutral phase’ after being relatively pessimistic for much of last year, said Roger Barker, director of policy at the IOD. ‘Green shoots are clearly visible, and the direction of travel is positive.’”, Bloomberg, May 31, 2024

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United States

“The Dollar Is at Its Strongest Since the 1980s. Can It Last? – The greenback is historically very expensive amid a recovery in global growth and a fraught election campaign. The U.S. dollar has defied analysts’ expectations and appreciated again this year relative to a basket of other currencies. For a decade now, currency markets have been ruled by the strengthening dollar….. Contrary to what many on Wall Street expected, the U.S. dollar has gotten a fresh wind this year, as bumpy inflation data has prompted investors to dial back bets on rate cuts.  Perhaps more important, economic growth is accelerating beyond America’s borders. Recent economic data suggests that the eurozone and Japan are finally turning up, and China’s recovery seems to be building momentum. Beijing is actively intervening to push up the yuan. A fall in the dollar usually greases the wheels of global growth.” The Wall Street Journal, June 4, 2024

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“Data Centers Are Driving An Electricity Demand Surge From AI Platforms Like ChatGPT – Did you know that every time you type a query into ChatGPT, it requires about 10 times as much electricity to process as a Google search? Did you know that every time you type a query into ChatGPT, it requires about 10 times as much electricity to process as a Google search? To help put things in perspective, ChatGPT currently has over 180 million users, but there are around 5.3 billion internet users around the world. Imagine if each of them became a regular user of energy-intensive ChatGPT, whose servers are located in the U.S., according to owner OpenAI.”, Forbes, June 3, 2024

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Brand & Franchising News

“Irish fast food chain’s victory over McDonald’s to use Big Mac name – Galway-based Supermac’s hails ‘David v Goliath’ legal win after European court backs its fight to use the name on chicken products. “McDonald’s loses the EU trademark Big Mac in respect of poultry products,” judges ruled. “McDonald’s has not proved genuine use within a continuous period of five years in the European Union in connection with certain goods and services,” they said. Supermac’s chicken burger, which can now be sold as a Big Mac in Europe.”, The Times of London, June 5, 2024

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“China’s Luckin Coffee Is Back From the Brink and Beating Starbucks – Consumers are getting hooked on cheap caffeine hits and coconut lattes, helping the chain overcome a scandal. Once derided as a cheap imitation of the Seattle-based giant, it’s now being emulated by other Chinese chains and even Starbucks appears to have taken a page or two from its playbook. The company’s focus on cashless, takeout kiosk counters, originally designed to save costs, paid off during the Covid years as strict lockdown policies restricted in-person exchanges.”, Bloomberg, June 6, 2024

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“Jimmy John’s global expansion continues with Korea! Today Inspire announced an international franchise agreement with YeokJeon FnC — an experienced food and beverage operator and the number-one pub franchise in the Korean market. We are thrilled to work with such a strong operator to bring Jimmy John’s quality, convenience and delicious sandwiches to the Asian market for the first time. Many thanks to our VP of Asia, Paolo Nicolas, his team and our development team for making this happen. Korea is Jimmy John’s third international market. We kicked off the brand’s global journey earlier this year with the announcement of deals in Canada and Latin America.”, LinkedIn, June 5, 2024

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“Another popular fast-food chain considers Chapter 11 bankruptcy – The fast-food brand’s sister company, a pizza chain, is also fighting for its survival. BurgerFi International (BFI) runs two brands: Anthony’s Coal Fired Pizza & Wings and its namesake burger chain. The company markets BurgerFi as being a superior product to traditional fast food (without directly calling out any competitors). Anthony’s currently has 60 locations; the company owns 59 and a franchisee runs one. BurgerFi has 102 locations, 75 franchised and 27 corporate-owned. The company said that it had filed documents with the Securities and Exchange Commission that acknowledge that there are situations where the company could not be able to survive.”, The Street, June 5, 2024

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To receive our biweekly newsletter in your email every other Tuesday, click here – 

 https://insider.edwardsglobal.com

Our Mission, Information Sources & Who We Are

Our biweekly global business update newsletter focuses on what is happening around the world that 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 Business 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.

“To his many clients who are going global, Bill oversees overseas.” — Franchise Times magazine

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.  

www.edwardsglobal.com

And download our latest chart ranking 40+ countries as places to do business at this link:

Our latest GlobalVue™ 40 country ranking

EGS Biweekly Global Business Newsletter Issue 109, Tuesday, May 28, 2024

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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

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The mission of this newsletter is to use trusted global and regional information sources plus our network of 20+ in-country Associates to update our global readers on key global and local trends that can impact the success of their businesses at home and abroad. We subscribe to about 40 international information sources to keep our readers up to date on the world’s business.  Some of the information sources that we provide links to require a paid subscription for our readers to access.  

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

“It is not the strongest or the most intelligent who will survive, but those who can best manage change.” ― Leon C. Megginson

“All failure is failure to adapt, all success is successful adaptation.” ― Max McKeown

“The secret to living well and longer is: eat half, walk double, laugh triple and love without measure.”, Tibetan Proverb

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Highlights in issue #109:

• The Top 6 Economies by Share of Global GDP (1980-2024)

• The World’s Most Valuable Soccer Teams 2024

• The Food Court Is Back

• (U.S.) Small Business Owners Feel Inflationary Pressures

• Anti-Israel Boycotts Hurting McDonald’s, KFC in Asia, Mideast

• The United States used to have cachet in China

• Brand Global News Section: Burger King®, Carl’s Jr®, Dominos®, KFC®, McDonalds® and Wendy’s®

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Interesting Data, Articles and Studies

“The Top 6 Economies by Share of Global GDP (1980-2024) – Over time, the distribution of global GDP among the world’s largest economies has shifted dynamically, reflecting changes in economic policies, technological advancements, and demographic trends. To see how this has played out in recent decades, we visualized the world’s top six economies by their share of global GDP from 1980 to 2024. All figures were sourced from the IMF’s World Economic Outlook (April 2024 edition) and are based on using current prices.”, Visual Capitalist, IMF, May 14, 2024

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“Google Is About to Change the Whole Internet — Again…The company’s all-in investment in AI. Will search engines be replaced by AI chatbots? In May, the company offered some clarity: ‘In the next era of search, AI will do the work so you don’t have to,’ according to a video announcing that AI Overviews, Google’s new name for AI-generated answers, would soon be showing up at the top of users’ results pages. The popular notion that the AI boom represents a disruptive threat to the internet giants deserves more skepticism than it’s gotten so far — the needs of the tech industry past, present, and future are neatly and logically aligned.”, New Yorker, May 19, 2024

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“The world’s economic order is breaking down – Critics will miss globalisation when it is gone. The dysfunction at the WTO (World Trade Organization) is emblematic of a world where the institutions and rules intended to foster international trade and investment are falling into abeyance. Every day brings alarming new headlines. The European Union, although supposedly both more supportive of free trade and more determined to reduce its greenhouse-gas emissions than other economic powers, is on the verge of imposing duties on Chinese electric vehicles. The proliferation of subsidies and sanctions is one of the most obvious signs of the unravelling of the “international rules-based order”, as policy wonks like to call it.”, The Economist, May 9, 2024

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“The World’s Most Valuable Soccer Teams 2024 – The average team is now worth $2.3 billion, a 5.1% increase from a year ago—despite headwinds in TV rights across Europe. When Sir Jim Ratcliffe, the billionaire founder and CEO of the Ineos chemical group, bought 27.7% of Manchester United in February for an enterprise value of $6.5 billion, it was the richest price ever paid for sports team in which the buyer also got operating rights. Real Madrid generated the most revenue ($873 million) of any team and has won the Champions League five of the past nine years.  Despite the speed bump in European broadcasting revenue, the average soccer team is now worth $2.3 billion, a 5.1% increase from a year ago.  Forbes, May 23, 2024

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

“A New Trade War Offers No Easy Way Back for Old Global Order – Rules-based trade fades as policies cement protectionism. Once a free-market cheerleader, US borrows from China playbook. The world’s three dominant economies are entering a new, combative phase as the US increasingly uses trade weapons borrowed from China’s playbook. That’s threatening to deepen international fractures and to challenge decades of free-market orthodoxy — and it leaves Europe with big decisions to make. The $31 trillion arena of international commerce has withstood a series of shocks in recent years, including the US-China trade war. This time, the linchpin is the European Union — caught between preserving its self-styled role as defender of multilateral rules and fearing the loss of millions of jobs and tens of billions in investment while the US and China wield market-distorting subsidies and tariffs.”, Bloomberg, May 23, 2024

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“Shipping rates spike as businesses expect more Red Sea attacks – Companies prepare to ship goods for festive season early as attacks by Yemen’s Houthis force ships to take longer route. The average cost of shipping a 40ft container between the Far East and northern Europe at short notice, the figure that is most sensitive to market prices, hit $4,343 last week, roughly three times higher than the same period last year, according to freight market tracker Xeneta.”, The Financial Times, May 25, 2024

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“US East Coast Ports Are Spending Billions to Profit From Asia’s Shifting Exports– Savannah and Brunswick in Georgia are looking to win business away from Pacific Coast rivals. As more export production destined for the US migrates to South Asia from China, the geographic edge is tilting toward the East Coast, which boasts quicker deliveries through the Suez Canal and across the Atlantic from such countries as India and Sri Lanka. Savannah also stands to benefit from a host of domestic factors, including the US population shift to Sun Belt boom states.”, Bloomberg, May 14, 2024

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Global & Regional Travel

“Singapore Airlines turbulence: stopping meal service may not reduce risk to passengers, Hong Kong’s Cathay Pacific union says – Paul Weatherilt, chairman of the Hong Kong Aircrew Officers Association, told the Post on Saturday tightening cabin service rules could bring about undesirable results and the best way to prevent injuries during flights was to require passengers to keep their seat belts fastened at all times.

‘I’m not convinced that stopping the [meal] service will necessarily change anything, and I think it is possible that it could have a counterproductive effect,’ he said. Weatherilt said Singapore Airlines’ rule revisions could make cabin crew hesitant to put the seat belt sign on, while meal service might not be halted quickly enough as it took time to retrieve the food carts.”, The South China Morning Post, May 25, 2024

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“Most Dangerous Cities in the World 2024 – You can yield a little less caution in some of the world’s safest countries, such as Iceland, New Zealand, and Portugal. With over 4,416 cities in the world, there are seemingly endless places to travel to and cultures to experience around the world. The world’s 50 most dangerous cities are located in 11 countries: Brazil, Colombia, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Puerto Rico, South Africa, the United States, and Venezuela. Brazil has the most cities on the list with 17, followed by Mexico with 12. Brazil, Mexico, and Venezuela are the only countries with cities in the top ten most dangerous cities. Mexico has five cities, Brazil has three, and Venezuela has two.”, World Population Review, May 2024

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Country & Regional Updates

South Africa

“South African Assets Primed for Post-Election Rally, but Old Challenges Persist – Rally has room to run after poll, Bloomberg survey finds Most investors overweight or neutral on South Africa. There’s a widespread belief among investors that stocks, bonds and the rand will keep soaring after the May 29 election, especially as record-hitting commodity prices boost the exports that South Africa’s economy relies on. In a Bloomberg survey of 26 emerging-market investors, most were overweight or neutral on South Africa, and said they preferred the country over investing in Egypt or Nigeria, Africa’s two other powerhouses.”, Bloomberg, May 23, 2024

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Argentina

“The State of Argentina’s ‘Transformation’ – Milei’s government has been more pragmatic than it said it would be. One of the public’s biggest complaints is the decline of purchasing power, which owes to inflation brought on by the government’s decision to lift market controls. Private employees fared significantly better than public employees, with respective decreases of 11.2 percent and 21.3 percent. More concerning is that in the past six months, the country’s minimum wage has lost 29 percent of its purchasing power, pushing more people into poverty. Argentina’s Pontifical Catholic University estimates that the poverty rate now stands at 57 percent. While better insulated from economic shock, even the country’s upper class has started to feel the pinch as inflation outpaces favorable exchange rates and a sharp decline in disposable income.”, Geopolitical Futures, May 24, 2024

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Australia

“Australian wine pours back into China as tariff-free shipments surge to over US$10 million in April – With import tariffs removed for the first time in three years, shipments of Australian wine to China surged in April, with analysts expecting producers to jump back into the lucrative market “quite quickly”. China imported US$10.4 million of wine from Australia in April, up from US$126,045 a year earlier, representing a roughly eightyfold increase, according to Chinese customs data. Imports by volume, meanwhile, increased more than sevenfold year on year to 462,518 litres (813,918 pints).”, The South China Morning Post, May 23, 2024

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China

“Brazil, India and Mexico are taking on China’s exports – To avoid an economic shock, they are pursuing a strange mix of free trade and protectionism. ‘The biggest threat of Chinese overcapacity is to developing countries,’ says Jorge Guajardo, Mexico’s former ambassador to China. In his country, which is proud of its car industry, the market share of Chinese-made vehicles has grown from next to nothing in 2016 to a fifth. Emerging economies are thus introducing import restrictions on Chinese goods, while accelerating a push for free trade elsewhere. This emerging-market attempt to lower trade barriers with the West is happening at the same time as they are being raised with China. Officials see this as necessary to protect domestic manufacturers until China’s subsidy wave subsides.”, The Economist, May 24, 2024

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“The United States used to have cachet in China. Not anymore. ‘Soft power’ is even more important during times of sharp words and military bluster, but the cultural appeal of American culture and ideas has waned in China. America, which is called “Meiguo” or “beautiful country” in Chinese, was the bastion of wealth and ease. Now, Chinese media and commentators mockingly refer to the United States not as “Meiguo” but as “Meidi” — “the beautiful imperialist.” And Chinese shoppers are more likely to be sipping a drink from Luckin, a Chinese coffee chain, than Starbucks or lining up all night to buy Huawei’s Mate 60 Pro than the latest Apple device. “, The Washington Post, May 25, 2024

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Europe

“Has Europe already reached its demographic tipping point? – The EU’s population is shrinking faster than expected, putting strain on government finances and the bloc’s long-term prospects.  The EU population rose in the year to January 2023, helped by an influx of displaced persons from Ukraine, after a temporary two-year dip that reflected the impact of the pandemic. Last year, Eurostat forecast that the population would peak at 453mn in 2026. But the 2023 numbers came in below expectations as EU births fell to levels Eurostat had not forecast for another two decades, suggesting the peak may come before 2026. What is becoming clear is that the EU’s long-predicted demographic inversion appears to be coming sooner than many experts predicted.”, The Financial Times, May 23, 2024

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“Europe’s New Power Map, From ASML to the Arctic – Places other than Paris, Brussels and Berlin are wielding economic influence. The power wielded by ASML (the Netherlands) from its campus in Veldhoven is one example of how Europe’s geographyis changing. French munitions factories and Italian shipyards are whirring as the war in Ukraine forces defense matters to front of mind. Chip factories are being built in cities that still bear the scars of World War II. Kalundborg, production hub for Ozempic maker Novo Nordisk A/S, is turning Denmark into a one-company country. Sweden is tapping raw-material deposits essential for the green transition; Finland is converting paper mills into supercomputers.”, Bloomberg, May 14, 2024

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Germany

“German economy expands slightly in first quarter of 2024 – The final estimate for Germany’s quarter-on-quarter gross domestic product (GDP) report for Q1 2024 came out on Friday morning. It revealed that GDP grew by 0.2%, according to the Federal Statistical Office. This was a surge from the previous quarter’s -0.5% and in line with analyst estimates. This increase was mainly due to a jump in gross fixed capital formation, which rose to 1.2% in the first quarter of the year, from -2.1% in Q4 2023, primarily driven by advances in construction investment.”, Euronews, May 24, 2024

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Gulf Cooperation Council (GCC) Countries

“Industries with huge potential: Saudi and the Gulf – As the world rapidly evolves, the Gulf Cooperation Council (GCC) countries, including Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman, are actively diversifying their economies and investing in innovative industries poised for growth. From harnessing renewable energy to pioneering artificial intelligence (AI) and architecting awe-inspiring structures, these nations are carving their paths toward a prosperous and sustainable future. Here are some of the industries that are poised to thrive in the future.”, Middle East Sunday Pages, May 19, 2024. Compliments of Corina Goetz

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India

“Global firms are tapping India’s workers like never before – They want their brains more than their brawn. Back in the 1990s global firms such as General Electric, a once-mighty conglomerate, began to rely on Indian workers to perform tedious tasks such as filling in forms and patching software for mainframe computers. More recently, technologies such as cloud computing and video conferencing have made it less cumbersome to tap India’s vast pool of brainy workers. Having learned how to supervise employees remotely through the covid-19 pandemic, plenty of bosses will have now pondered whether some roles could be done from farther afield.”, The Economist, May 23, 2024

Japan

“How Japan Thinks about Energy Security – Energy security is a significant challenge for Japan. As an import-dependent country, Japan has sought to protect itself from fossil fuel supply disruptions and shocks by cultivating strong relationships with exporting countries and investing throughout the energy value chain. When the Biden administration “paused” approvals of new U.S. liquefied natural gas (LNG) export projects, the strongest international reaction was not in Europe—the destination for most U.S. LNG cargoes since 2022—but in Japan. Japanese officials registered concerns about potential restrictions on future gas supply.”, Center for Strategic and International Studies (CSIS), May 22, 2024

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Singapore 

“Taylor Swift and Coldplay concerts may have saved Singapore’s economy from shrinking last quarter – ‘Swiftonomics’ could have helped drag Singapore’s economy across the finish line. The Southeast Asian country banked on several high-profile events—most notably concerts by superstar Taylor Swift—to jump-start tourism spending.  Some 4.36 million visitors arrived in Singapore in the first three months of the year, according to data from the Singapore Tourism Board. The average hotel occupancy rate for that period was 81.49%, compared with 77.8% for the same period in 2023. Half the audience for both the Coldplay and Taylor Swift concerts came from overseas, according to the Monetary Authority of Singapore.

United Kingdom

“The five key business issues the next government needs to address – Whether Labour or the Conservatives win the election, they will have momentous decisions to take. With Rishi Sunak having fired the starting gun for a snap general election for July 4, business is moving quickly to lobby the political parties on key reforms that boardrooms want from the next government. During the next six weeks of campaigning, leading business groups representing large parts of the economy will promote their own manifestos, having consulted with member companies, including some of the country’s biggest employers. The British Chambers of Commerce, the Federation of Small Businesses, UK Finance and Make UK are all due to publish blueprints.”, The Times of London, May 24, 2024

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United States

“ (U.S.) Consumer Confidence Dips In April – Consumer confidence was down in April. Consumers expressed concerns about the job market, nonessential spending, and their ability to make ends meet, according to the Numerator Consumer Sentiment Tracker that captures more than 6,000 responses a month and provides a comprehensive monthly view of consumer confidence, spending and saving considerations, and future financial outlook. The April Consumer Confidence Score was 56.9 (-0.4 vs. March), which is an average of how consumers feel about the job market, their household finances, and their spending comfort levels.”, Franchising.com, May 25, 2024

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“ (U.S.) Small Business Owners Feel Inflationary Pressures – New survey data from Goldman Sachs’ 10,000 Small Businesses Voices finds that business owners across the country are reporting significant inflationary impacts on the costs of doing business. Compared to three months ago, 71% say inflationary pressures have increased on their businesses, and 49% say they’ve had to raise the prices on their goods or services over that period.”, Franchising.com, May 24, 2024

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Brand & Franchising News

“Burger King-parent RBI completes Carrols acquisition – Company buys largest U.S. franchisee and plans $500M investment in reimaging 600 restaurants. Restaurant Brands International Inc. has completed its acquisition of Carrols Restaurant Group Inc., its largest Burger King franchisee in the United States, for about $1 billion and plans to invest an additional $500 million to reimage 600 Carrols restaurants, the company said Thursday. Toronto, Canada-based Restaurant Brands International, which offered $9.55 a share in the all-cash transaction that was announced in January, said the $500 million reimaging was part of its “Reclaim the Flame” plan, announced in fall 2022.”, Nation’s Restaurant News, May 16, 2024

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“Carl’s Jr. to Expand into the U.K. and the Republic of Ireland under a New Master License Agreement with Boparan Restaurant Group – Under this agreement, BRG will open, operate, and franchise restaurants throughout the territory as the exclusive Carl’s Jr. developer. This partnership further solidifies Carl’s Jr.’s European presence which includes nearly 100 restaurants across Spain, France, Denmark, Turkey, and Switzerland.”, PRNewswire, May 22, 2024

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“Wendy’s sold to global restaurant management firm Flynn – The New Zealand business of burger restaurant chain Wendy’s has been sold to US franchise operator Flynn Group, marking the company’s first change in ownership in more than three decades. The Lendich family, which has operated the franchise since 1988, put it up for sale in June 2022. The franchise includes 22 restaurants with 12 stores in Auckland, eight in other parts of the North Island, and two on the South Island.”, InsideRetail, May 21, 2024

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“Anti-Israel Boycotts Hurting McDonald’s, KFC in Asia, Mideast – McDonald’s saw impact in Middle East, Muslim countries Pakistani can maker to Coca Cola, Pepsi had 11% sales dip. The situation has inflamed tensons in the Middle East that has led to an outpouring of support for Palestinians. Many Muslims in the region changed their consumption habits since the war started, slashing demand for fast food from American retailers. More than 100 KFC outlets in Malaysia were forced to close temporarily. Malaysian operator QSR Brands (M) Holdings Bhd. appealed to its large Muslim consumer base that it has over 18,000 team members in the country, of which, approximately 85% were Muslims.”, Bloomberg, May 24, 2024

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“Jubilant FoodWorks Poised for Massive Expansion – Jubilant FoodWorks Ltd (JFL), the master franchisee of Domino’s Pizza in India and several other markets, with a market capitalization of INR 31,517 crore, announced plans on Wednesday to significantly expand its store network. The company aims to increase its Domino’s Pizza outlets from 2,793 to over 5,500 across six global markets in the medium term.  JFL operates in India, Turkey, Bangladesh, Sri Lanka, Azerbaijan, and Georgia. Last year, its subsidiary, Jubilant Foodworks (NS:JUBI) Netherlands BV (JFN), acquired DP Eurasia, the master franchisee of Domino’s in Turkey and Georgia, thus expanding JFL’s footprint beyond Asia.”, Investing, May 22, 2024

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“The Food Court Is Back – Attention, mall shoppers: Restaurants are taking up more retail space. It’s good news for fixtures like Cinnabon and bubble tea shops.  Floor space in malls as in-store shopping declines and consumers seek experiences rather than goods, says Emily Arft, an analyst at Green Street, a real estate research firm. Formats are changing: “A lot of landlords are thinking about making a more cohesive retail experience where you have dining throughout, not just in one dedicated center,” Arft says. Still, that’s been good for food court newcomers and stalwarts, including everyone’s favorite auntie.”, Bloomberg, May 17, 2024

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To receive our biweekly newsletter in your email every other Tuesday, click here –  https://insider.edwardsglobal.com

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.

www.edwardsglobal.com

And download our latest chart ranking 40+ countries as places to do business at this link:

Our latest GlobalVue™ 40 country ranking

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