US chip restrictions hurts growth of its own semiconductor firms – Victor Shih

 

Victor Shih

US restrictions on purchasing chips from China are hurting US semiconductor firms, says political analyst Victor Shih in an interview with the state news agency Xinhua. Not every chip sold by U.S. companies is cutting edge or has national security relevance. In those cases, the U.S. government should show some flexibility,” said Shih

Xinhua:

The Biden administration’s curbs on chip sales to China likely have impeded revenue growth of U.S. chips companies to some extent, a U.S. expert has said.

“The U.S. chips companies, like any companies, are very interested in expanding market share, and selling to the China market is very important since China is now the biggest consumer of chips in the world,” Victor Shih, associate professor of political science who also heads the 21st Century China Center at the School of Global Policy and Strategy with the University of California San Diego, told Xinhua in a recent interview…

On July 25, the Semiconductor Industry Association and Oxford Economics released a joint report stating that approximately 67,000 positions in the U.S. semiconductor industry, including roles for technicians, computer scientists and engineers, are projected to remain vacant by 2030.

Besides the shortfall of skilled workforce, the high cost is another hurdle for the industry. “The higher cost basis in the U.S. will not change in the short run. In the medium term, it remains unclear whether the U.S. can set up an apprenticeship program to train sufficient numbers of technicians for semiconductor fabs,” said Shih.

The Semiconductor Industry Association revealed that the 10-year total cost of ownership of a new lab in the United States is 30-50 percent higher than in East Asian economies…

If the restrictions continue, “the segmentation of the global semi market potentially will create very capable Chinese chips competitors to U.S. companies since Chinese buyers now have no choice but to buy from domestic chips makers, giving them a large captive market,” Shih said.

“A balance between national security concerns and commercial concerns is possible. Not every chip sold by U.S. companies is cutting edge or has national security relevance. In those cases, the U.S. government should show some flexibility,” said Shih.

More at the state-owned Xinhua website.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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H&M tries to regain confidence of China consumers – Arnold Ma

 

Arnold Ma

H&M tries to retain market share in China after a consumer boycott of a range of Western fashion brands – including also Nike and Burberry – on its Xinjiang stance by launching two new brands. The results with the consumers in China have been mixed, says marketing expert Arnold Ma in Jing Daily.

The Jing Daily:

“There are reports saying some consumers still turned their back to the two brands having found their link to H&M, which shows the brand still hasn’t been fully forgiven by Chinese consumers,” said Arnold Ma, founder of China-focused digital marketing agency Qumin.

“On the other hand, the latter two have challenged the image of H&M as a ‘roughly-made’ fast fashion brand by providing better quality products at a higher price,” he continued. “So, the premiumization, to some extent, helps the two win over some Chinese consumers who pay more attention to quality and design.”…

While H&M, Nike, and Burberry have all pushed ahead in China, they have done so to varying degrees of success. Burberry, which has bounced back faster than the others, has partially benefited from being a luxury brand. As Yam, who has more than a decade of Chinese digital marketing experience, said, “It’s harder to replace — you don’t have another Burberry. For Nike, [consumers] can find the China version, Li-Ning, which is popular in China now. And for H&M, there’s so much fast fashion.”

None of this is surprising, as China accounts for less than 5 percent of H&M’s global revenue, while Burberry’s China revenue accounts for almost half of their global total, Ma noted. Indeed, China is just one — albeit very important — market for these global companies. Recovery, therefore, not only entails reevaluating China tactics but also ensuring a strong global network for when a crisis eventually hits.

The Jing Daily.

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Why the China internet went after H&M – Shaun Rein

 

Shaun Rein

H&M got hit by an unprecedented boycott from Chinese consumers, as the China internet went after the company for its stance on labor in Xinjiang. Partly that vehement outpour of anger was caused because internet companies have been under government investigations, says veteran business analyst Shaun Rein, so they had to prove more than ever they were not a danger for that government, he says at AP.

AP:

“It’s a form of self-preservation,” said Shaun Rein, managing director of China Market Research Group in Shanghai.

Rein said the outpouring of anger at H&M is the harshest he has seen against a foreign brand. He said companies are especially sensitive because this comes at a time when Chinese anti-monopoly and other regulators are stepping up scrutiny of internet operators.

“If they don’t try to criticize, they’ll also get in trouble,” Rein said.

More at AP.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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How can foreign brands deal with Chinese consumer boycotts? - Shaun Rein

Shaun Rein

Getting into hot water with China's consumers, its government or both happens regularly to foreign brands. Business analyst Shaun Rein uses the latest NBA-upheaval to explain how those boycotts work, and how foreign brands can deal with them, according to the Marketplace.

The Marketplace:

China’s nearly 1.4 billion consumers take issues about the country’s territorial integrity seriously. “They go back to what they consider humiliation during the Qing Dynasty,” said Shaun Rein, author of the book, ‘The War for China’s Wallet.’  

“They feel that the Western powers, led by the British, enslaved the Chinese to opium [and] destroyed the country’s economy.”... 

Chinese firms suspended or canceled sponsorship deals with the National Basketball Association last month after Houston Rockets’ general manager, Daryl Morey, tweeted support for protesters in Hong Kong.  

Ecommerce giants Alibaba, JD.com and Suning voluntarily removed Houston Rockets merchandise from their platforms.  

“They’re showing the government that they will support the motherland,” Rein said.
There are some signs that NBA is on a slow route to recovery in China. While Chinese state broadcaster CCTV has not resumed airing NBA games, internet giant Tencent has — except for the ones involving the Rockets.  

Rein, who is also founder of the China Market Research Group, suggested the best way for foreign brands to combat these boycotts and bans is to issue a sincere apology.  

“What we tell our clients is stand up, apologize [and say] ‘We are sorry. We respect China. We respect China’s sovereignty issues,’” he said. “Then afterwards you can say pretty much anything, as long as you’re showing respect to the Chinese people.”  

Rein said the NBA fell far short of that but, even so, that public anger appeared to have subsided after Chinese state media stopped covering the controversy.
There are times, however, when the central government, via the state press, whips up public anger.
In 2016, China felt threatened when South Korea signed a deal with the U.S. to deploy an American anti-ballistic missile shield called the Terminal High Altitude Area Defense (THAAD).
Rein said the government criticized South Korea in the Chinese state press.  

“They basically said: ‘How dare this little country install something that could be an offensive tool against us,’” he said. Chinese consumers took the cue. They stopped buying Korean cars, cosmetics and snacks.  

South Korean supermarket chain Lotte, because it provided land for the South Korean military to build the THAAD system, was the hardest hit.

More in the Marketplace.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Boycotting United might be tough - Shaun Rein

Shaun Rein

United Airlines caused an uproar among its customers in China by forcefully removing a Chinese-American doctor. But calls for a boycott be understandable, but hard to execute, says business analyst Shaun Rein to BuzzFeed.

BuzzFeed:

Access to the Chinese market is important to United, which says it runs more nonstop flights to Chinese cities than any other US airline, including routes from Beijing, Shanghai, Chengdu, Xi’an, and Hangzhou to all over the US. The airline also has a code-sharing deal with Air China on certain routes. 

“It’s clear that Chinese partners like Air China will say to them, ‘What’s going on, this is unacceptable,’ and will want them to make it clear that it’s not a racist statement against the Chinese,” said Shaun Rein, managing director of China Market Research Group, who said he regularly works with multinational companies concerned about attacks from the Chinese government and consumers. 

Rein added, however, that there are relatively few options for air travel between China and the US, so the airline may not face much impact from cost-conscious consumers in the end.

More in BuzzFeed.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Boycott: standard treatment for opponents - Shaun Rein

Shaun Rein

South-Korea was the latest country to suffer from economic boycott measures from China after it deployed THAAD missiles on its soil. Tourism backed out and Korean factories suffered surprise inspections. A standard procedure, says business analyst Shaun Rein to CBS. Norway, France, Japan, Taiwan and other suffered from similar boycotts.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more strategy experts to manage your China risk at the China Speakers Bureau? Do check out this list.

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