Trump did not convince the Chinese - Arthur Kroeber

Arthur Kroeber

One year into the trade war, China's negotiators have not been convinced US President Donald Trump is having the upper hand, says economist Arthur Kroeber to the Washington Post.

The Washington Post:

By depressing demand for Chinese goods, U.S. tariffs have cost 3 million Chinese factory workers their jobs, according to Trump, and put pressure on Chinese President Xi Jinping to make a deal. 

Trump's claim to have the upper hand at the negotiating table does not appear to have convinced the Chinese. 

"They've decided Trump is a vacillating guy who can't figure out what he wants and gets spooked every time the stock market goes down or someone accuses him of not being tough," said Arthur Kroeber, managing director of Gavekal Dragonomics, a consultancy in Beijing. "Although there are problems in China, they believe they have their economy under control, more so than Trump. They think he is more vulnerable to a slowdown and that they can afford to wait him out."

The Washington Post.

Arthur Kroeber 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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How Twitter, Facebook removed China's fake accounts - Victor Shih

Victor Shih

In a remarkable move Twitter and Facebook removed this week China-based accounts spreading fake news on Hong Kong. Political analyst Victor Shih looks in Politico at the effect of this new policy against Russian-style fake news.

Politico:

The accounts suspended by Twitter and Facebook on Monday were not linked to China’s state-run media organisations. 

Rather they were part of a network of fake accounts whose described tactics appear akin to the Russian misinformation campaigns coordinated to sway American public opinion in the lead-up the 2016 U.S. election. 

“China is copying Russia and has set up a large number of accounts on Facebook and Twitter to pump out anti-protester propaganda filled with factually untrue statements and pictures. [Such accounts are] an attempt to polarise opinion, which Twitter and Facebook have publicly stated they don’t want to do, so they are acting on their new policies,” said Victor Shih, a professor at the University of California, San Diego’s School of Global Policy and Strategy. 

He noted that the platforms had tightened regulations following “blowback” after the 2016 poll. 

“They increased the level and awareness and [changed] the algorithm that they are using to catch manufactured campaigns for a political end, especially a violent political end,” Shih added. 

Facebook on Monday removed seven pages, three groups and five accounts involved in “coordinated inauthentic behaviour as part of a small network that originated in China and focused on Hong Kong”.

More at Politico. 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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More needed to stop child abuse - Zhang Lijia

Zhang Lijia

Sexual child abuse, especially those left behind by their migrant parents, needs more attention, writes author Zhang Lijia, who wrote a bestseller on prostitution in China in the South China Morning. She applauds actions taken by the Supreme People's Court of China but sees it only as a start.

Zhang Lijia:

Last month, the Supreme People’s Court of China held a press conference following the publication of four so-called typical cases of sexual abuse of children. It vowed to use all means, including the death penalty, to punish child sex offenders. I was also a victim of child sex abuse, one of many girls molested by a teacher at my primary school in Nanjing. 

This is a hidden but growing epidemic. News portal Caixin.com reported that some 8-12 per cent of China’s 270 million minors may have experienced sexual assault, including rape for 1 per cent.

“It means that nearly 30 million Chinese children could have been the victims of sexual abuse,” Shang Xiaoyun, director of Beijing Normal University’s Family and Child Research Centre, was quoted as saying. 

I believe various factors contribute to the worrying trend. As is the case elsewhere, the internet has become an increasingly treacherous place for young minds. In two of the cases presented by the court, the perpetrators met their victims online; one was promised a starring role in a film.

Left-behind children are particularly vulnerable. In the past four decades, some 300 million people have moved from their villages to seek work in the city, leaving millions of children behind, often without adequate care.

More at the South China Morning Post.

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

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The trade war fallout - Victor Shih

Victor Shih

The trade war damages both the US and China's economy, and global trade. Financial and political analyst Victor Shih, Ho Miu Lam Chair associate professor of political economy at UC San Diego and author of the forthcoming “Economic Shocks and Authoritarian Stability," gives an overview of the damage in the Los Angeles Times.

Victor Shih:

The trade spat between the U.S. and China now seems headed toward a new phase, which could prove to be far more dangerous for the global economy. 

The recent shifts roiling global markets began with President Trump tweeting on Aug. 1 that the U.S. would impose an additional 10% tariff on $300 billion in Chinese exports, starting Sept. 1. On Tuesday, the administration announced a delay on tariffs on some consumer goods until Dec. 15. But that may not be enough to alleviate the anxiety in world markets. China already reacted last week by weakening the Chinese currency, pushing the exchange rate to 7 yuan per dollar for the first time in over a decade. 

Both sides risk considerable harm to their economies. As the Trump administration increases tariffs on Chinese goods purchased by American firms and consumers, Americans will be paying billions more for Chinese goods. Higher prices brought on by tariffs will decrease U.S. business investment and consumption, dampening momentum in U.S. economic growth. 

Likewise, China’s imposition of tariffs on American goods — even barring Chinese companies from buying agricultural and energy commodities from the U.S. — since the start of the trade conflict in April 2018 has imposed costs on Chinese firms and consumers, stalling growth momentum in China. 

With inflation on food already at 7% in China, more import restrictions or tariffs will put a great deal of hardship on ordinary households. Although Chinese President Xi Jinping does not face any electoral pressure and may not suffer any political fallout from the economic results of the trade war, these consequences still directly contradict his desire to bring about “more prosperous and healthy lives” to the Chinese people. 

Now, devaluing the yuan may further jeopardize the stability of China’s financial system. China’s high domestic debt already forces the central bank to expand its money supply at a rate of 8% to 10% a year, a relatively high pace that typically weakens the exchange rate. 

To guard against the expectation of a weakening currency, the central bank of China has spent years establishing the reputation of the yuan, which has been built on the tacit assumption that it would not fall below 7 yuan to the dollar. This reputation is important for the yuan because, unlike the dollar, the currency does not have a deep and liquid market, where market participants can hedge against various risks at a relatively low price.

More at the Los Angeles Times.

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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Foreign brands have to become more political savvy in dealing with China - Shaun Rein

Shaun Rein

Foreign brands got into hot water when describing Hong Kong, Macau and Taiwan as independent countries. Business analyst Shaun Rein explains at the BBC it is not only the government fanning the flames but increasingly nationalistic consumers who boycott foreign brands stepping on political toes.

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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Starbucks competitor Luckin struggles to hold on - Ben Cavender

Ben Cavender

The first quarter of China's coffee maker Luckin after it's US IPO earlier this year proved to be a rough one, as shares dropped. Luckin has a of work to do to catch up with competitor Starbucks, says retail analyst Ben Cavender to Reuters.

Reuters:

Luckin has gone toe-to-toe with Starbucks in China since it opened its doors early last year and the results highlight the Chinese company’s high cash-burn rate as it offers cut-price alternatives. 

Luckin’s operating expenses surged more than three times in the June quarter, as it opened 593 new stores taking its total to 2,963, about 1,000 fewer than Starbucks. 

On an adjusted basis, Luckin lost 48 cents per share. Analysts expected a loss of 43 cents, according to IBES data from Refinitiv. 

“(While) Luckin probably has done slightly better in the most recent quarter in terms of acquiring and keeping customers, the company is still having to work on aggressive recruiting of customers, which hurts the bottom line,” Ben Cavender, Shanghai-based principal at China Market Research Group, said before the results were released. 

Luckin has also expanded beyond coffee, allowing customers to buy food and other beverages via its app.... 

Analysts reckon both coffee companies will soon see more competition from smaller rivals. 

“At home Luckin is facing increasing competition both from quick service restaurant brands like KFC that are placing greater emphasis on coffee, as well as smaller chains like Manner Coffee that are using somewhat similar business models to interact with the consumer,” said Cavender. 

Luckin’s total net revenue surged more than seven-fold to 909.1 million yuan in the June quarter.

More in Reuters.

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What if China runs out of US dollars? - Victor Shih

Victor Shih

China has been saving much capital in US bonds and could use those resources to finance its debt and policies in the past. But what happens if China runs out of US dollars, asks political analyst Victor Shih in the New York Times.

The New York Times:

Both men [Trump and XI] rely on a political base that responds to nationalism.

Mr. Xi also appears to have a team of hard-liners around him, including the Minister of Commerce, Zhong Shan, who was recently added to the Chinese negotiating team. 

“For now, Xi is signaling that he is a tough nationalist who will not back down in the face of very aggressive behavior on the part of the Trump administration,” said Victor Shih, an associate professor at the University of California, San Diego, and an expert on the Chinese economy... 

“The draining of China’s foreign exchange could break China’s current economic model of using state directed money to finance certain policies,” said Mr. Shih. “China can print renminbi endlessly but it can’t print American dollars.”

More in the New York Times.

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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Marketing to China's silver hair consumers - Ashley Dudarenok

Ashley Dudarenok

Most wealth in China is in the hands of the 50+ year generation, says marketing expert Ashley Dudarenok, but most marketing still focuses on the young. She wants to step up marketing efforts for the silver-haired consumers, who have 70-80% of the countries wealth to spend.

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

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Devaluation: no manipulation, just basic economics - Jim Rogers

Jim Rogers

China is not manipulating its currency, says trader Jim Roger. When your currency gets hit by massive tariffs it is basic economics your currency goes down, he says to RT. "No trade war is good for anybody. Everybody loses."

Jim Rogers 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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Ian Johnson no.1 in 2019 Best In-Depth Newswriting on Religion Contest

Ian Johnson

Journalist Ian Johnson, author of The Souls of China: The Return of Religion After Mao, has won the 2019 Best In-Depth Newswriting on Religion Contest, says the website of the American Academy of Religion (AAR).

The AAR:

“The AAR is pleased to recognize these journalists whose news reporting includes well-written, diverse and engaging topics,” said Alice Hunt, Executive Director of the AAR.  “The news articles address some of the prominent religion news stories of 2018 that not only inform but also enhance the public understanding of religion,” Hunt added. 

Ian Johnson submitted articles that address an unfettered interest in religion in China that speaks to the relationship between religion, politics, and society, including "#MeToo in the Monastery," "10 Million Catholics in China Face Storm They Can’t Control," and "The Uighurs and China’s Long History of Trouble with Islam." Jurors described this work as a “deep-dive series of articles with an excellent mix of journalism and public scholarship.” 

The winning series “also provides new and relevant information to today's political and religious debates and is informed by scholarship that the public sometimes has a hard time accessing,” cited the jurors.

More at the AAR. 

Are you interested in more stories by Ian Johnson? Do check out this list.

New retail: changing the shopping mindset - Ashley Dudarenok

Ashley Dudarenok

New retail is changing the mindset of both the Chinese consumers and the retailers, writes marketing expert Ashley Dudarenok. Some brands are finally getting the idea, but for traditional retailers, there is still a lot of work to be done, she says in the China Economic Review.

Ashley Dudarenok:

These days, Chinese consumers aren’t as target-oriented and purpose-driven as they used to be when shopping in physical spaces. Since they can very quickly and easily find specific items while shopping online, they don’t go to stores with the same mindset except for grocery shopping. They care more about exploring physical locations at their leisure. 

When consumers go to a shopping mall, they don’t normally go to buy specific brands. Instead, they go to have fun with their children, learn things, and have experiences like dining out or going to a movie. Despite this, physical stores haven’t yet mastered the art of creating unforgettable consumer experiences that keep consumers coming back. New Retail, when done well, does. But what is New Retail? 

New Retail, which Jack Ma defined as “the integration of online, offline, logistics and data across a single value chain.” uses technology to merge online, offline, logistics, big data, cloud computing, entertainment, news and social media into a seamless shopping experience. Ma introduced the term in 2016 along with New Technology, New Manufacturing, New Finance and New Energy. 

Many of the technological advances and digital business approaches of New Retail were well underway in many other markets as far back as 2005 or earlier. Within China, JD.com and Tencent have their own versions of it which they call Boundaryless Retail and Smart Retail respectively. 

It includes initiatives like omnichannel retail, experiential retail, integrated social media, click and collect, same day or one hour deliveries, unstaffed stores, fully automated warehouses and more. It enables people to, for example, purchase an item online at a discount using a code from an online influencer, pick it up from a smart locker the next day and then take it to a physical store 3 months later for repairs. 

Internationally, brands and businesses that are excelling in this area include John Lewis, Waitrose, Amazon, Walmart, Carrefour, IKEA, Target, Tesco, eBay, Nike and Decathlon as well as smaller brands like Warby Parker, Orvis, Welden and Value City Furniture. 

New Retail is consumer-centric and driven by data to improve a shopper’s experience and save them time and money. However, it also improves operational efficiency and results in cost savings for the retailer.

Much more in the China Economic Review. Ashley Dudarenok is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more consumer experts at the China Speakers Bureau? Do check out this list.  

African states can ask China for more transparency - Howard French

Howard French

Transparency is not a natural thing for China, not domestically nor internationally. But African states can ask China for more transparency, argues journalist Howard French, author China’s Second Continent: How a Million Migrants are Building a New Empire in Africa, to Inkstone.

Inkstone:

Howard French, author of China’s Second Continent: How a Million Migrants are Building a New Empire in Africa, said China has very limited transparency and public accountability in its own domestic processes.

“So it would be unusual to expect that China would introduce greater transparency and accountability in its dealings with African countries than it is used to at home – that is, unless African governments insist on it,” French said.

“And this is where African governance comes in. African states should insist on contract transparency but often don’t do so because that offers leaders plentiful opportunities for graft.”

More at Inkstone. Howard French 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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How to compete in China - William Bao Bean

William Bao Bean in Minsk

In China, the internet is the economy. SOSV managing director William Bao Bean explains how international firms can enter the China market. With magic information on how Tencent and their WeChat dominate the playing field, and how you can win that war. And how Chinese companies are conquering the world.

William Bao Bean 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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Big four accounting firms: winning again in China - Paul Gillis

Paul Gillis

The Chinese government has tried to promote local CPA's on the expense of the Big Four, but - says  Beida accounting professor Paul Gillis - the 2018 top-10 CPA ranking shows the Big Four are back winning market shares, with PwC, Deloitte and E&Y in the top three, he writes at his Chinaaccountingblog.

Paul Gillis:

China had a policy to promote the development of local CPA firms, but it no longer seems to be on that path. The first indication was mandatory audit rotation on companies with state ownership. The first large scale rotation was in 2012 and somewhat surprisingly nearly all of these companies simply moved from one Big Four firm to another, albeit with significant fee reductions. The government strongly encouraged companies to select a non-Big Four auditor, but they were largely ignored. The next round of audit rotation takes place in 2020, and if local firms do not win some of the large state-owned enterprises I think the Big Four will be cemented into these slots. 2020 is shaping up to be one of the most significant years in the development of the CPA profession in China.  If the Big Four can retain the large state controlled enterprises in the 2020 audit rotations they are likely to retain a strong market position for the foreseable future. 

The Big Four have over 27,000 employees in China, led by PwC at 9,460 out of 250,000 PwC employeees worldwide. Overall, there are 120,604 people working for accounting firms in China. 

Big Four firms do not release information on profitability.  But since payroll is the largest expense for accounting firms, a good measure is revenue per employee. As expected, the Big Four have significantly higher revenue per employee than local firms, with a notable exception of PwC. PwC has revenue per employee of RMB 540,635 compared to an average of RMB 652,390 for the other Big Four.  This suggests PwC is likely less profitable than the other firms and is potentially overstaffed.

More (including the 2018 ranking) in the Chinaaccountingblog.

Paul Gillis 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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Next in the trade war: economic disengagement between US and China - Arthur Kroeber

Arthur Kroeber

New tariffs are not the main worry, as new shots are fired in the trade war between China and the US, says economist Arthur Kroeber according to Barron's. Next is the upcoming disengagement between both economies and the question of what domains will be involved.

Barron's:

Scenario-planning around whether or not there is a deal isn’t very useful for investors. The reason? The Trump administration isn’t likely to impose the next tranche of tariffs, Kroeber writes, noting that the next round could crater the U.S. markets and hurt the economy—both unfavorable as Trump goes into his re-election campaign. Even if there is a deal, he writes, it may not restore U.S.-China trade and investment relations back to their prior state. Investments from China have plummeted to $5 billion last year, down from $29 billion the year before, according to Rhodium Group. Plus, Kroeber expects some tariffs to stay in place even if there is a deal and U.S. restrictions on China’s access to high-value technology to continue, as will companies’ efforts to diversify their supply chains and rely less on China. 

The bigger question for investors is how the U.S.-China relationship is reset. “The shift from seeing U.S.-China economic integration as positive to seeing it as negative is a fundamental one. There is no doubt that the U.S. government will now try to drive as much economic disengagement from China as possible. The question is how effective that drive will be, and which domains will be most affected,” Kroeber writes.

More in Barron's.

Arthur Kroeber 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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China moves to kill animal cruelty in cosmetics tests - Mark Schaub

Mark Schaub

China forced global cosmetics brands to use animal tests before entering the market, but is now moving to fall in line with cruelty-free cosmetic tests, writes lawyer Mark Schaub at the China Law Insight. "For international cosmetic companies, this may make the Chinese market more attractive for cruelty-free brands. However, issues will still exist but the direction at least should be applauded," he says.

Mark Schaub:

This is the first time the Chinese authorities have explicitly on the record opened the door to excluding animal testing for imported cosmetics products across the country. 

This also further evidence a trend in that the Chinese authorities are s experiencing a strategic shift in regulatory thinking, moving from strict pre-entry control to a more balanced combination of pre-market regulation and active and on-going post-market supervision. 

For international cosmetic companies, this may make the Chinese market more attractive for cruelty free brands. However, issues will still exist but the direction at least should be applauded. 

For international cosmetic companies already in the China market or imminently entering then the Measures when implemented would allow for a weaning off Chinese partners in that their own representative office could serve as the domestic responsible person. 

However, existing players will likely need to negotiate the way to freedom or de-coupling from their Chinese partners as the Measures do hint at agreements being required for existing relationships. 

International cosmetic companies will likely cheer the NMPA’s quantitative grading system that will result in more attention being paid to untested, inexperienced or non-compliant manufacturers. Most international cosmetic companies will already meet the requirements under Chinese law.

More at the China Law Insight.

Mark Schaub 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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China: the unstoppable consumer force - Shaun Rein

Shaun Rein

China has developed into the largest consumer markt of the world, passing the US. Business analyst Shaun Rein explains to Richard Engel of NBC how they did it. "China is an unstoppable force," Shaun says.

You can see the full NBC program on China here.

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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A realistic view on Tibetan Buddhism - Ian Johnson

Ian Johnson

Journalist Ian Johnson, author of The Souls of China: The Return of Religion After Mao reviews a show at the Rubin Museum of Art in New York City on Tibetan Buddhism for the NY Review of Books, a must read even when you do not make it to New York. Ian Johnson adds on Facebook: "Probably no faith is more stereotyped than Tibetan Buddhism, which has morphed in the West to a sort of feel-good faith led by a nice guy with a Nobel Peace Prize."

Ian Johnson:

Probably no faith is more stereotyped than Tibetan Buddhism, which has morphed in the West to a sort of feel-good faith led by a nice guy with a Nobel Peace Prize. While that isn't necessarily wrong, its infantilizes (or Orientalizes; pick your stereotyping verb) a complex religion that--like others in the world--has always been closely linked to power and even violence. 

That's why I was really excited to see a show at the Rubin Museum of Art in New York City on exactly this topic--how religion and politics are tightly intertwined in Tibetan Buddhism. I review the show for the New York Review of Books Daily (click on the link below for the review) and think you'll find the piece interesting even if you don't have a chance to see the show. And if the article isn't enough, buy the outstanding catalogue that accompanies the show.

You can find Ian's article in the NY Review of Books here. Ian Johnson 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 cultural experts at the China Speakers Bureau? Do check out this list.

How China moved from imitation to creation - William Bao Bean

William Bao Bean (right) in Shenzhen

Innovation expert William Bao Bean acts as a city guide in hardware capital Shenzhen for NBC's Richard Engel to show how it changed from a fishing village into a booming city. This is what we call China speed, explains William.

The full program is available here.

William  Bao Bean 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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Winners and losers in the China-US trade war - Shaun Rein

Shaun Rein

Consumers are changing their purchasing behavior because of the effects of the ongoing trade war between China and the US. Business analyst Shaun Rein tells the CityWireSelection who are the winners and losers of this war.

Shaun Rein:

The US/China trade war is affecting Chinese consumer behaviour more heavily than many investors realise. For example, luxury jeweller Tiffany & Co. reported a 25% drop in Q1 sales to Chinese tourists visiting the US. 

Chinese people simply don’t want to visit the US right now because they do not feel welcome in Trump’s America. The number of Chinese tourists to Hawaii so far in 2019 has dropped by 23%. Chinese people are also starting to skip buying US brands such as Apple. The big winners out of this shift are Japan, Thailand and domestic Chinese tourist areas such as Yunnan and Gansu. Europe can attract Chinese tourists as well, but much depends on whether the individual country is viewed as pro-China. 

Italy, for example, will benefit, as it was the first major western European economy to sign up to China’s ‘One Belt One Road’ initiative. How well luxury players such as Gucci or Louis Vuitton do will depend largely on political issues in the next quarter.

More at the CityWireSelection.

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 strategic experts on the China Speakers Bureau? Do check out this list.