Biweekly Global Business Newsletter Issue 110, Tuesday, June 11, 2024
Edited and curated by: William (Bill) Edwards, CFE, CEO of Edwards Global Services, Inc. (EGS)
Comments About This 110th Issue: Countries – other than the USA – begin to cut interest rates. McDonald’s loses the right to call a chicken Big Mac, a Big Mac. The almost continually strong US$ is not helping US exports of products and services. Heathrow is like a Second World War airport (but we knew that!). The world’s biggest shopping center is getting bigger. A query into ChatGPT requires about 10 times as much electricity to process as a Google search
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
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.
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
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®
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
“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
“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
“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
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
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
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
“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
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
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
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
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
“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
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
“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
“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
“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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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.
And download our latest chart ranking 40+ countries as places to do business at this link:
Our latest GlobalVue™ 40 country ranking
The Fastest 2 Minutes in International Franchising
Our GlobalTeam™ of highly experienced international specialists in the USA and on the ground in 32 countries contributed to this summary of today’s world business opportunities. Countries to watch for excellent business development opportunities in 2017: the Philippines, the UAE, Spain and Poland.
| Asia | China Japan Malaysia The Philippines Thailand Viet Nam |
Consumer economy growing at over 8% per year Corporations are seeking consumer investments Political and currency unrest Many new US international businesses opening Starting a comeback from post-coup recession 6%+ GDP growth, USA franchises desired |
| Americas | Argentina Brazil Canada Chile Colombia Mexico Peru USA |
Dramatic change, new government, improving economy Economy, stalled, inflation up, government problems New tax-focused government Government regulations increased Uneven growth, low new investment Post US election new investment stoppage New pro-business government, US brand friendly Renewed business confidence: lower taxes, regulations |
| Europe | Ireland Germany Poland Russia Spain Turkey United Kingdom |
Good GDP growth, slow to see new investment Difficult to find investors for foreign brands Highest EU GDP growth Not now!!! Recovery speeding up, heavy new investment Political unrest and terrorism = no new investment BREXIT & election fallout slowing new investment |
| Middle East | Egypt Saudi Arabia United Arab Emirates |
Security and hard currency problems Difficult to get new businesses open once built New US brands entering, strong new investment |
| Elsewhere | Australia India New Zealand South Africa |
Challenge to find investors for foreign brands Challenge to find licensees who follow system Few consumers, but pro foreign brands High unemployment (25%), low new investment |
Keeping ahead of the wars, economic meltdowns, and political disasters
One of our jobs for our U.S. clients is to look two to three years ahead, figure out where wars will raging, where economic meltdowns will be occurring, and where political disasters are looming – then take our clients elsewhere!
The key to successful international business is constant monitoring of the economies around the world and being ready to move quickly to higher potential and calmer countries.
Why do we need to do all this? Our company exports U.S. franchise brands.
We act as an outsourced international development department for brands such as Build-A- Bear Workshop®, Denny’s®, International Dairy Queen, Lawry’s® The Prime Rib, Massage Heights®, Everlast Fitness® and Mosquito Squad®. One of our primary tasks is helping the brands prioritize the countries they enter, focusing on countries that have the highest ROI potential for the specific brand.
Recently, the CEO of one of the brands we work with told me that our job was to look two to three years ahead, figure out where the wars will be and take them elsewhere.
It turns out this is just a little bit funny – while at the same time being quite serious.
I would restate this to looking two to three years ahead not only to determine the potential for war, but also the potential for economic meltdowns and political disasters.
This is important due to the fact that it can take two to three years to find and sign a country licensee, and then another one to two years to get the first unit of the franchise open in a country.
How do we do this? Research, research and more research.
We subscribe to 25 international business data and analysis sources. We have team members on the ground in 32 countries. And our US-based executive team collectively has 120 years of international experience living and working in over 69 countries. We have a full time Director of Research who monitors our sources and watches for trends.
That being said, there are still ‘exciting’ events that change the potential for finding investors in a target country that are ready and willing to make the new investment required to acquire the license of one of our U.S. franchise brands.
Two examples are the recent United Kingdom Brexit vote and the disintegration of Turkey as a place to do business.
No one really thought about what the consequences of actually voting to leave the European Union would be. Now we are beginning to see consequences – and all is not good. Where were the adults when this was happening?
I lived in Turkey in the mid 1980s and it was a great place to reside and to work. It was the world’s only secular, Muslim democracy. Turkey had a female Supreme Court judge before the USA, and a female Prime Minister in the 1990s. Over the past 10 years, things have gradually changed, and now Turkey is no longer secular and it is not really a democracy. The Ottoman Sultan seems to have returned after 100 years. The rapid GDP growth rate is being replaced with the rapid growth of inflation. In recent weeks, inward investment has stopped, and Turkish business people are not making any new investments. Our company has closed our office in Istanbul.
On the other side of the coin is Argentina. For several decades this country has been run by poor governments that defaulted on international loans and paid foreign franchisors their royalties in soy beans. Early in 2016 a new and radically different government came into power. In a matter of a few months they settled the long standing debt problem and made the local currency float free against the dollar. New inward investment is staggering as this first world country with a highly educated population is starved for new products, services and brands. We have started marketing U.S. franchise brands in Argentina for the first time since the mid 1990s. As a local business person told me, “The U.S. dollars have come out of the Argentinean mattresses for the first time in decades.”
At the end of the day we have learned that constant research is key to looking ahead. We have also learned that there will always be surprises. The key to successful international business is constant monitoring of the economies around the world and being ready to move quickly to higher potential and calmer countries.
EGS publishes research projects related to global business development, most notably the GlobalVue™ franchise country ranking, which has been published quarterly since 2001. The latest version of this country ranking tool can be downloaded at the following link: EGS-Dual-GlobalVue-0716.pdf
William Edwards, CEO of Edwards Global Services, Inc., has 40 years of international business experience. He has lived in 7 countries, worked on projects in more than 60, and has advised more than 50 U.S. companies on international development. Contact him at +1 949 375 1896, bedwards@edwardsglobal.com, or read his blog at Geowizard.biz
A version of this blog first appeared In the Fall 2016 edition of the International Executive Resources Group (IERG) Fall 2016 ‘IERG Connect’ newsletter.
The Fastest 2 Minutes in International Franchising
Our GlobalTeam™ of highly experienced international specialists on the ground in 32 countries contributed to the following brief summary of the franchise world opportunities for 1st quarter 2016. Countries to watch for franchise opportunities in 2016: Argentina, the Philippines, the UAE, Spain, Poland and Peru.
| Asia | China Japan Malaysia The Philippines Thailand Viet Nam |
Consumer economy growing at 8.2% per year Only large corporations are investing in new projects Political unrest, declining Foreign Direct Investment Many new US F&B brands opening 4% GDP growth expected in 2016 6.5% GDP growth, prefer US franchise brands |
| Americas | Argentina Brazil Canada Chile Colombia Mexico Peru USA |
Dramatic change, new positive government Economy is stalled, inflation climbing, political uncertainty Declining investment in F&B, tax focused new government 3.7% GDP growth for 2016. Government regulations? Show me the money and where it came from Mexico City, Monterrey and Cancun booming Lima is a city of cranes and new foreign franchises US$15/hour minimum wage kills margins. Election year |
| Europe | Ireland Germany Poland Russia Spain Turkey United Kingdom |
GDP growth of 3.5% projected for 2016 Difficult to find investors/risk takers for new foreign brands 3%+ GDP growth for 2016. Slow new franchise investment Not now 2.7% GDP growth for 2016. Recovery speeding up Political unrest leading to drop in new project investment 2.2% GDP growth, but normal investment analysis paralysis |
| Middle East | Egypt Saudi Arabia Dubai |
Pent-up consumer demand, high growth, iffy security Challenges to get new businesses open due to regulations New building push, large expat influx, airport & airline soaring |
| Elsewhere | Australia India South Africa |
GDP growth of 2.5% but falling commodity exports. Jobs iffy? Not another country, another universe. But opportunities. Low growth, high unemployment (25%), low new investment |
The Fastest 2 Minutes in International Business
Our GlobalTeam™ of highly experienced international project managers – on the ground in 32 countries – contributed to the following brief summary of the franchise world opportunities for 4th quarter 2015.
| Asia | China Japan Malaysia Mongolia The Philippines Thailand Viet Nam |
Watch the consumer economy not the overall GDP growth. Large corporations are investing in new consumer projects. Ringgit drop of 25% against the US$ plus political unrest. US pizza and coffee franchises flourishing. Seriously. Middle class buying power accelerating. Stable politics. Military dictatorships often are stable. US sailors on shore leave, 6%+ GDP growth. |
| Americas | Argentina Brazil Canada Chile Colombia Mexico Peru USA |
You still get paid in soybeans, if at all. Economy is stalled, inflation climbing, corruption rife. Tim Horton’s and Burger King are now one??? New President negative on business. Investment stopped. Show me the money and where it came from. Mexico City, Monterrey and Cancun booming. Lima is a city of cranes and new foreign F&B brands. US$15/hour minimum wage means no margins, less jobs. |
| Europe | Ireland Germany Poland Russia Spain Turkey United Kingdom |
GDP growth of 3.5% projected for 2016. Difficult to find investors/risk takers for new foreign brands. 3.5% GDP growth for 2015 is the highest in the EU. Foreign brands with US$ denominated rents are closed GDP growth for 2016 estimated to be 2.6%. Political unrest leading to drop in new project investment. 2.4% GDP growth, but normal investment analysis paralysis. |
| Middle East | Egypt Saudi Arabia Dubai |
Pent up consumer demand, high growth but scary security. Challenges to get new businesses open due to regulations. New building push, large expat influx, airport & airline soaring. |
| Elsewhere | Australia India South Africa |
GDP growth of 2.6% but falling commodity exports. Jobs iffy? Not another country, another universe. Low growth, high unemployment (25%), low new investment |
