Foreign business and the Chinese Communist Party - additional stress to US-China commercial relations

It is widely agreed by foreign multinational corporations operating in China that the Chinese Communist Party (CCP) is strengthening its influence — often gaining direct decision-making power — over the international firms doing business in China.

CCP officials are increasingly calling on companies to support the creation of party organizations among their employees. The potential for party groups to influence corporate decision making has raised concern among many US company executives - such an environment is only adding more stress to the US-China commercial relationship.

Since taking power, Xi has reasserted the CCP's supremacy, with himself as its “core” leader. This has meant greater control over personnel and strategy at state-owned enterprises, which control about 40 percent of the China’s industrial production, as well as schools and universities. Xi’s chief policy-making instrument has been an increasing array of party “leading small groups,” which set and coordinate policy. 

Foreign companies are concerned about the establishment of a party unit in a foreign company and what this means should the CCP play a broader role in foreign companies’ operational decision making. For example, making decisions which are political rather than for business reasons. 

No doubt American business is telling the Trump administration such moves by the CCP into potential management roles of foreign-invested enterprises is not a positive step for the commercial relationship. 

Should the current trade irritation between China and the United States worsen, Beijing could be moved to intensify the party’s role in foreign business further, even allowing the boycotting of American goods and services, creating yet more headaches for businesses operating in China.

This real time business environment has put American companies in particular in the middle of a brewing fight between Beijing and Washington.

Enjoy the ride.

-Marc A. Ross

Marc A. Ross is the founder of Caracal Global and specializes in global communications and thought leader management at the intersection of politics, policy, and profits. Working with boardrooms and C-Suite executives from multinational corporations, trade associations, and disruptive startups, Marc helps business leaders navigate globalization, disruption, and American politics.

Mexico City, US-Japan, Netflix, Kendrick Lamar, El Segundo, Overworking

Mexico City, US-Japan, Netflix, Kendrick Lamar, El Segundo, Overworking

Marc Ross Daily
April 17, 2018
Curation and commentary from Marc A. Ross

Reporting from Alexandria, Virginia

Marc Ross Daily  = Global Business News at the Intersection of Politics + Policy + Profits

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✔️ NYT - Editorial: The President is not above the law

GEOECONOMICS

NAFTA: VP Pence and Canadian Prime Minister Justin Trudeau said a deal for a renegotiated North American Free Trade Agreement is possible in the coming weeks. 

Slim adds his backing to $13bn Mexico City airport: FT reports, billionaire extols benefits while admitting to worries if leftist candidate wins election.

Populism is bringing ‘civil war’ to Europe, warns Macron: The Times reports, the French president has warned that the European Union faces a “civil war” and “fascination with the illiberal” as nationalist governments in Poland and Hungary turn away from liberal democracy.

Commonwealth Summit: PM Theresa May yesterday opened a Commonwealth summit in London for the first time in 20 years. The three-day meeting will focus on post-Brexit trade opportunities and putting the Commonwealth at the heart of the UK’s new foreign policy. 

Brexit: Only 346 days to go

Trump and Abe face the first real test of their relationship: NYT reports, Trump will host Prime Minister Shinzo Abe of Japan on Tuesday amid tensions over North Korea and American tariffs.

A grumpy Trump welcomes Japan’s weakened leader: WP reports, Prime Minister Shinzo Abe and the president are weathering scandals at home, with investigators and journalists poring over evidence of both leaders’ alleged cronyism.

China to allow full foreign ownership in auto industry: AP reports, China announced plans Tuesday to allow full foreign ownership of automakers in five years, ending restrictions that helped to fuel its trade dispute with U.S. President Donald Trump as it promotes electric car development. The change would scrap rules that require global automakers to work through state-owned partners, an arrangement that forces them to share technology with potential competitors. It was unclear whether that might mollify Trump, who has threatened tariff hikes on $150 billion of Chinese goods in response to complaints Beijing pressures foreign companies to hand over technology.

WSJ: China fends off trade trouble with 6.8% growth

NYT: China’s economy grows, and its trade gap with the US widens

DW: China logs solid growth despite trade row

US cuts off China's ZTE from American tech for seven years:Bloomberg reports, the U.S. government said Chinese telecommunications-gear maker ZTE Corp. violated the terms of a sanctions settlement and imposed a seven-year ban on purchases of crucial American technology needed to keep it competitive. The Commerce Department determined ZTE, which was previously fined for shipping telecommunication equipment to Iran and North Korea, subsequently paid full bonuses to employees who engaged in the illegal conduct, failed to issue letters of reprimand and lied about the practices to U.S. authorities, the department said.

Huawei, failing to crack US market, signals a change in tactics: NYT reports, last week, the company laid off five American employees, including William B. Plummer, the executive who was the face of its Sisyphean efforts to win over Washington, according to people familiar with the matter. Huawei has also been dialing back its political outreach in the United States, these people said — which could end a decade of mostly fruitless efforts to dispel Washington’s accusations that the company has ties to the Chinese government.

AMERICAN POLITICS

NYT - Editorial: The President is not above the law

"The president is not a king but a citizen, deserving of the presumption of innocence and other protections, yet also vulnerable to lawful scrutiny. We hope Mr. Trump recognizes this. If he doesn’t, how Republican lawmakers respond will shape the future not only of this presidency and of one of the country’s great political parties, but of the American experiment itself."

Hannity is named as client of Cohen: WSJ reports, Fox News commentator Sean Hannity was revealed in federal court to have been represented by Trump’s lawyer, Michael Cohen.

WP: There’s a ‘tsunami’ of companies applying for relief from Trump’s steel and aluminum tariffs

How trade tensions will test companies and investors: Barron's reports, it’s not just the direct impact on targeted goods. Uncertainty over tariffs may cause businesses to delay or change spending and hiring plans. http://bit.ly/2qCqj2G

ENTERPRISE

Mastercard: Michael Froman, former USTR, is joining the company as vice chairman and president of strategic growth.

Domino's Pizza announced it is expanding its online ordering service to include 150,000 new delivery "hotspots" such as U.S. parks, beaches and other locations without traditional addresses.

Waymo applied to begin testing autonomous vehicles without human backup drivers on California roads.

Ford is building out a network of driverless taxis by 2021.

Bloomberg: Ola wants a million electric rides on India's roads by 2021

"Uber’s rival will start with 10,000 three-wheeled rickshaw"

Reuters: Robots will replace humans in retail, says China's JD.com

“Sooner or later, our entire industry will be operated by AI (artificial intelligence) and robots, not humans,” Richard Liu said retail executives at the annual World Retail Congress in Madrid. 

WSJ: Goldman Sachs profit jumps 26%

Would you pay $18.75 for ad-free Facebook? WP reports, Facebook's chief operating officer, Sheryl Sandberg, recently told NBC that an ad-free iteration of the social network "would be a paid product." So how would a subscription-based, zero-ad Facebook work?

Reuters: J&J Baby Powder litigation takes new focus with asbestos claims

IPhone owners in the U.S. spent an average of $58 last year, up 23% from 2017, according to Sensor Tower. The bulk of spending, $36 per user, was on games.

Bloomberg: Apple is planning to launch a news subscription service

Zuckerberg’s dual role at Facebook helm draws fresh fire: FT reports, Illinois state treasurer joins push by New York City pension chief for an independent chairman.

Facebook has lost 'a lot of trust,' EU official warns: Handelsblatt reports, the EU justice commissioner accuses Facebook CEO Mark Zuckerberg of negligence in dealing with users' data. European and German politicians hope a tough new law will be a turning point.

Facebook employees earned a median pay package of more than $240,000 last year.

Netflix added 26 million subscribers during the past 12 months, reaching 125 million. The streaming service, which announced first-quarter results yesterday, said revenue had increased 40% to $3.7bn over the same period. Netflix predicts that next quarter, for the first time, most revenue will come from non-American subscribers. The firm said it will invest $10bn on content and marketing over the next year.

FT: Netflix overseas sales to surpass US home market

Comcast will begin bundling Netflix with plans for cable TV, phone, and internet starting this month.

General Assembly has agreed to be acquired by the Swiss workforce company Adecco for $412.5 million.

WPP is hit as fears grow of break-up: The Times, almost £1 billion was wiped off the value of WPP yesterday as the advertising giant launched a hunt for a chief executive to succeed Sir Martin Sorrell amid mounting fears that his exit could precipitate a break-up of the company. 

Samsung jumps on the blockchain bandwagon: Bloomberg reports, the world’s biggest maker of smartphones and semiconductors may use the technology behind cryptocurrencies to manage its vast global supply network.

TRENDS

Guardian: Scientists accidentally create mutant enzyme that eats plastic bottles: Scientists have created a mutant enzyme that breaks down plastic drinks bottles – by accident. The breakthrough could help solve the global plastic pollution crisis by enabling for the first time the full recycling of bottles. The new research was spurred by the discovery in 2016 of the first bacterium that had naturally evolved to eat plastic, at a waste dump in Japan. Scientists have now revealed the detailed structure of the crucial enzyme produced by the bug. http://bit.ly/2viTVaV

Wired: Sorry, but Amazon isn’t actually annihilating retail jobs http://bit.ly/2vjPtsh

"The diverse and interconnected variables that shape our economy and affect job markets are often unseen and difficult to evaluate, especially without the perspective of history."

You'll pay a lot, but you'll get more than you pay for. That's as useful a freelancer marketing strategy as you can fit in a single sentence. -- Seth Godin

Wall Street has lessons to learn about overworking: FT reports, there is no evidence that the culture of long hours yields better results. https://on.ft.com/2HpDD4O

Can smartphones stop the death of the salesman?https://on.wsj.com/2J1OfnL

How to save the mall: BOF reports, developers of premium shopping centers are reducing their dependence on fashion retail and doubling down on food, wellness, and other lifestyle offerings. http://bit.ly/2JQACZM

For retail to thrive, I recommend ideally all, or at best a combination of these tactics: The winning dozen:

Education                        
Experience                    
Entertainment                
Brandless                        
Efficiency + Explicit            
Niche                            
Voice
Entrepreneurial
Ethos
Instagram
Comms + Thought Leader
Nostalgia

CULTURE

LAT: Sleepy little El Segundo is suddenly on the radar and fighting to keep its small-town identity https://lat.ms/2ETHm5j

‘Civilizations’ is the most ambitious story about art ever told on television: WP reports, with a global scope that reaches right back to cave painting, the nine-part history of art, which begins Tuesday on PBS, is an unprecedented undertaking in the annals of television — and for some, compulsory viewing. https://wapo.st/2qCHX6c

Kendrick Lamar deserves his Pulitzer. Rap is the most significant music of our time. WP reports, the 30-year-old rap superstar won for his outstanding 2017 album, “DAMN.”

SPORT

$927,744 = That’s the average compensation for an athletic director at a university in the ACC, Big 12, Big Ten, Pac 12 or SEC.

How soccer’s most stubborn manager solved the Premier League: WSJ reports, Manchester City’s Premier League triumph is an era-defining title for manager Pep Guardiola and caps a decade of Guardiola-ball across the Continent. https://on.wsj.com/2Ht1mBi

Boston Marathon 2018: Desiree Linden wins, Sarah Sellers second on dominant day for Americans: CBS News, Yuki Kawauchi of Japan won the men's race while American Sarah Sellers finished second among the women.

CNN: American woman and Japanese man win Boston Marathon's elite divisions

Detroit Free Press: Des Linden of Washington Twp., Michigan, wins race

Linden ran an unofficial time of 2 hours, 39 minutes and 54 seconds. She's the first American woman to win the race in 33 years. 

Linden and Kawaucki ended 30-year droughts for their respective nations.