Wednesday, February 26, 2020
Home Blog Page 2

Gucci Owner Kering Halts Spending in China on Coronavirus Fears

PARIS—Gucci-owner Kering has closed half of its stores in China and shelved new openings and advertising campaigns there as the coronavirus outbreak throws luxury brands into turmoil.

The French group, which also owns Saint Laurent and Balenciaga, remained upbeat about its longer-term prospects as it beat fourth-quarter sales forecasts on Feb. 12.

But like rivals, it said disruptions were inevitable from an outbreak that has emptied malls and shopping streets in China, which accounts for more than a third of luxury goods sales.

“We are seeing a sharp drop in traffic and sales in mainland China,” Chairman Francois-Henri Pinault said, adding shops in China that remained open, including in Hong Kong, were on reduced hours.

Kering is postponing store renovations and new openings, as well as reviewing product launches in China, Pinault added.

“We are reallocating inventory to other regions of the world to make sure we are not overstocked in China” he said, without giving an estimate for any impact from the virus on earnings.

Italian puffer jacket maker Moncler said this week shopper numbers at its Chinese stores had plunged 80 percent since the virus outbreak, while jeweler Pandora has said business in the country had ground to a halt.

Kering makes 34 percent of its sales in Asia Pacific, excluding Japan. Spending on its brands by Chinese customers, who have traditionally shopped with it overseas, has shifted overwhelmingly to mainland China, where the new coronavirus, COVID-19, originated.

Entire cities in the world’s second biggest economy are now shut off, flights have been cancelled and many countries are banning entry to visitors coming from China, exposing Kering and other high-end houses to a major sales hit.

The crisis has compounded a plunge in sales in Hong Kong due to months of pro-democracy protests. Kering’s fourth-quarter sales in the Chinese territory halved.

Nonetheless, group revenue rose 13.8 percent to 4.36 billion euros ($4.76 billion) in October-December, helped by demand in China prior to the virus outbreak. That equated to an 11.4 percent…

Source link

Chengdu Trilateral Summit still to deliver

South Korean President Moon Jae-in, Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe pose for a photo at the eighth trilateral summit meeting in Chengdu, China, 24 December 2019 (Photo: The Yomiuri Shimbun).

Author: Choong Yong Ahn, Chung-Ang University

The three leaders of China, Japan and South Korea capped off their eighth trilateral summit in December 2019 with the issuing of the Trilateral Cooperation Vision for the Next Decade in Chengdu. Their joint statement contained amicable commitments and pledges to realise a ‘free, non-discriminatory, transparent, predictable, and stable trade and investment environment’ and to keep markets open in addition to maintaining durable peace and security in the region.

Despite the summit’s rhetoric, there were insufficient action plans. But the fact that China, Japan and South Korea (CJK) engaged in an agreed-upon trilateral summit framework, and bilateral dialogues on the sidelines, was no small achievement given heightened tensions between the three countries.

South Korea and Japan have avoided a bilateral summit since tensions erupted in late 2018 over the wartime forced labour issue and has spiralled into diplomatic brinkmanship. Tourist flows between China and South Korea became constrained after the decision for South Korea and the United States to deploy the Terminal High-Altitude Area Defense (THAAD) missile defence system on South Korean territory. Historical legacies, security-related tensions and a lack of trust between China, Japan and South Korea have made efforts towards trilateral economic cooperation unpredictable.

The three countries have suffered the effects of the US–China trade war. It is uncertain how long the temporary ceasefire agreed upon in the US–China trade deal will last or what will come next.

The trade war slowed China’s annual growth rate to 6 per cent in the third quarter of 2019, the lowest since the early 1990s, while indirectly hitting South Korea and Japan. The resulting contraction of South Korean exports to China is likely to further dampen South Korea’s poor growth prospects for 2020, already at its lowest since 2008.

Japan’s exports to China for 11 months of 2019 were down by about 10 per cent compared to the same period in 2018. The economic restructuring of Japan is also suffering setbacks due to the failure of the Trans-Pacific Partnership following the United States’ exit in 2017.

It is against this backdrop that China, Japan and South Korea seek to deepen trilateral cooperation. This cooperation would lead to freer regional trade, investment and disaster management in the East Asian economic community as envisioned at the first trilateral summit in 2008.

But the three countries’ economies are greatly influenced by US economic policy. How the US–China trade war unfolds will have a significant impact on the future of China–Japan–South Korea trilateral cooperation. One way to escape the chaotic downside risk is to speed up the implementation of the Regional Comprehensive Economic Partnership (RCEP) and the ongoing China–Japan–South Korea Free Trade Agreement (CJK FTA) negotiations.

The CJK FTA was launched in 2012 and motivated by the notion of an ‘East Asian identity’. It seeks to promote intra-regional economic cooperation to mitigate the negative economic consequences of unprecedented economic crises, such as the 1997 Asian financial crisis.

The three countries also joined RCEP negotiations in 2012 with a text-based agreement inked in November 2019 after 27 rounds of negotiations with 15 signatories while India opted out. As RCEP without India would be half-baked, the fate of RCEP is uncertain. Fortunately, India has not withdrawn acrimoniously, so the door is still ajar for its signature.

Some members might feel uneasy about a China-dominant RCEP without India. China needs to be more responsive to India’s concerns to salvage the mega deal, despite its shallow and lower standard of openness compared to the Trans-Pacific Partnership. Additionally, it appears that CJK FTA progress is subject to fate of RCEP.

The CJK economies have been great beneficiaries of the liberal trade system of the past four decades and have become a global manufacturing hub by taking advantage of naturally-emerging regional value chains arising from geographical proximity and inherent manufacturing competitiveness. As long as the trilateral flow of goods is not weaponised, cross-border foreign direct investment is well  protected, and tourism remains unconstrained, the three countries’ natural market value chains are likely to increase in mutual gains. It is imperative that the CJK leaders enable this to happen to live up to the spirit of trilateral common prosperity.

The CJK leaders must realise that at the root…

Source link

APRIL International Care opens up TeleHEALTH service to address Coronavirus worries

Image by amrothman from Pixabay

Hong Kong February 10, 2020 – APRIL International Care has opened up its TeleHEALTH service to all individual and group clients across its Asian region to provide support for clients during the current Coronavirus outbreak.

Global consumers reel from China’s coronavirus containment as…

A message went up in the WeChat discussion group shared by residents of The Belcher’s apartment complex in Hong Kong’s Pok Fu Lam district on Wednesday morning. “Toilet paper rolls are running out!” said the post.As word spread among the estimated 7,000 residents living in The Belcher’s six tower blocks, households rushed into nearby supermarkets to replenish their stockpiles. By the day’s end, every grocer, pharmacist and supermarket in the neighbourhood had run out of toilet paper, sanitary…

Source link

Coronavirus Outbreak in China Forces White Collar Class to Work From Home

SHANGHAI—In a nation unaccustomed to widespread working from home, China’s coronavirus outbreak is forcing millions of white-collar workers to get used to business outside the office.

With millions of companies keeping staff away to curb contagion, demand is surging for chat apps that employees are adjusting to use from living rooms, kitchens and home offices.

“When we did our first video call on Monday, some people looked like they just got out of bed,” said Jingshu Chen, who runs virtual reality startup VeeR, which asked its staff to stay away from their Beijing office for the week.

“Then, when we did a video call on the second day, everyone looked ready to work.”

Provinces across China have ordered companies to shut or make staff work from home for at least another week after the Lunar New Year holiday. Many firms may extend that further.

The work-from-home policies have led to a surge in downloads for WeChat Enterprise, DingTalk, and Lark—three workplace chat apps operated by Tencent, Alibaba, and ByteDance respectively.

According to data from research firm App Annie, both DingTalk and Lark saw downloads across China’s app stores surge over 350 percent during Chinese New Year week compared to one week prior.

Downloads for WeChat Work surged by almost 70 percent in the same time.

Both DingTalk and WeChat Work suffered connectivity issues due to heavy usages, the companies confirmed in public statements addressing user complaints.

Couriers and Round-the-Clock

Companies are also relying more on China’s army of couriers, who are keeping many self-quarantined residents fed and supplied. VeeR’s Chen said large video files that her team once accessed on an office network are now delivered to employees’ homes via hard drives with couriers.

Some fear financial disruptions.

John Rood, who runs a digital marketing agency in Shenzhen, said the nationwide work-from-home experiment could cause late payments from clients due to banking system quirks.

“A lot of Chinese banks require you to use a USB drive to log into your account, for security measures,” he said.

“But…

Source link

Fighting the new coronavirus

On New Year’s Eve, the Chinese government announced that it had discovered 27 cases of a new coronavirus in Wuhan, the most populous city in central China.

India navigates a new global order

A crow flies past a container ship docked at a port in Vallarpadam in the southern Indian city of Kochi (Photo: Reuters/Sivaram V).

Author: Suman Bery, Wilson Center

With Indian economic growth slowing, commentary is focused on Finance Minister Nirmala Sitharaman’s 2020–21 Union Budget.

Less public attention is being paid to India’s external challenges.  The world economy matters to India today and India has itself become a global player. The rules-based multilateral economic order which supported global integration for a generation is under widespread challenge.  As multilateral institutions weaken and bilateral negotiations assume centre stage, India is compelled to articulate an economic sovereignty that’s politically grounded domestically while remaining sufficiently flexible to grasp opportunities in the years ahead.

Deep shifts in global order have been building, but a key marker is the 2008 financial crisis. Its origins in the most advanced financial markets provoked continued widespread questioning of the liberal consensus in vogue.

The crisis also triggered recognition by the advanced countries (meeting as the Group of Seven) that emerging markets were systemically important in output, trade and finance. The Group of 20 (G20), including India, first met at the head-of-government level in 2008 and has met at least annually since.

G20 participation has had two subtle but profound implications.

As with the G7, meetings among leaders on the great issues facing the world economy has downgraded the importance of treaty-based economic institutions, notably the IMF, the World Bank and the WTO.

These institutions possess the legitimacy of near-universal membership and hold formal responsibility for guiding the global economy, but ended up followers rather than shapers of cross-border policies between the world’s economies. They are accordingly less effective in cushioning disagreements and ensuring consistency of treatment than originally intended. These developments affect India adversely.

Second, the G20 embodies a shift in global attention from national living standards (real per capita income) to size of economy. The doctrine of poorer countries receiving special treatment has been replaced by expectation of burden-sharing, irrespective of level of development. Two critical domains are in rules for trade and expected action on climate change. As the poorest (and least urbanised) G20 member, India’s particularly affected.

Changes in the political economy of inter-governmental relations have been accompanied by unsettling global economic changes that could be seen as a ‘new normal’. One feature is the collapse of inflation, particularly in the advanced economies, but even flirted with by China.

This shift is reflected in astonishingly low interest rates, whose weakness as a monetary stimulus tool has led to massive expansions in advanced countries’ central bank balance sheets — designed to stimulate spending by boosting the prices of domestic financial assets. While the recovery in growth is welcome, the associated global monetary disorder and volatile capital movements complicate economic management in emerging markets such as India.

Equally troubling are two other developments: the slowing in world trade growth since 2008 and the rise of anti-migrant sentiment in many advanced economies. Trade and immigration are beneficial for growth, productivity and real incomes. Populist politicians have been quick to blame ‘unfair’ globalisation for stagnant wages, rising inequality and for hollowing out manufacturing sectors. The spectacular success of China as an exporter of manufactured goods has provided ammunition to these critics.

India is compelled to take a clear-eyed strategic view of the emerging international economic landscape and the implications for growth. Even if India’s development path remains largely driven by domestic choices, shifts in the global order will affect its opportunities. Fresh thinking in its economic diplomacy is urgently required.

In addition to financial volatility mentioned earlier, there are three sources of worry: access to markets, access to technology and weakened multilateralism.

Till now India has taken comfort that WTO rules would maintain its market access in merchandise trade. Today the WTO’s dispute settlement function is shut down by US veto; the consensus principle is regarded by advanced economies as ‘unworkable’; special and differential treatment is being challenged; the issue of state aid for exports has become a major concern; and new issues such as digitalisation are being discussed in plurilateral groups that India has chosen to avoid. With China in mind,…

Source link

‘Frost on Top of Snowfall’: Virus Piles Pressure on China’s Industrial Machine

SHANGHAI/BEIJING—The coronavirus is threatening to disrupt large parts of China’s manufacturing machine and its global supply chains as the spread of infection and strict public health measures force companies and workers to remain idle.

China’s most important holiday was due to end on Jan. 31, when many companies planned to get back to work after a week-long vacation, but authorities have ordered businesses in many areas to stay shut longer in a bid to contain the disease.

Widespread travel restrictions, meanwhile, mean millions of migrant workers may be unable to return to what has often been called the world’s factory floor.

The World Health Organization on Thursday declared the outbreak a global health emergency.

Brian Miller, 32, owner of Easy China Warehouse and a bluetooth speaker company in the southern city of Shenzhen, said labor and production disruptions could ripple through supply chains, from raw materials to final assembly.

“If we can’t get back to production quick enough, I’ll run out of inventory, and I’ll have a few months where we won’t be able to sell anything. And that’s the catastrophe that we all don’t want,” Miller told Reuters.

In Eastern China’s Suzhou, one of the country’s largest manufacturing hubs, companies have been told to stay shut until at least Feb. 8 and in Shanghai until Feb. 9. Factories in the southern manufacturing hub of Dongguan in export-oriented Guangdong Province have also been told not to open before Feb. 10.

The threat of significant disruptions comes as China was already undergoing the biggest supply chain shift in a generation as companies grappled with the impact of the Sino-U.S. trade war and an economic slowdown.

A woman surnamed Chen, who co-owns a garment factory in Huizhou in Guangdong Province, described the virus and shutdowns as being like “frost on top of snowfall.”

Her domestic focused factory already had to lay off almost half its workers from over 70 to around 40 due to the slowing economy, and she fears more jobs may be lost in coming months.

“The outbreak is definitely causing great damage to our…

Source link