Chinese Investment, Brexit, Harley-Davidson, Uber, Amazon, Iceland, Italy

Chinese Investment, Brexit, Harley-Davidson, Uber, Amazon, Iceland, Italy

Marc Ross Daily
June 25, 2018
Curation and commentary from Marc A. Ross

Reporting from Alexandria, Virginia

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

Subscribe here: https://goo.gl/bSQKwA

TOP FIVE

✔️ US plans curbs on Chinese investment, citing security risk

✔️ Erdogan claims victory in Turkey elections

✔️ 2 years on, Brexit vote has taken a toll on UK economy

✔️ Harley-Davidson to shift some production of motorcycles

✔️ Uber is appealing a ban in London

ROSS RANT

What global business needs to know about Xi

Earlier this year, Chinese Communist Party big boss Xi Jinping broke with a 25-year tradition by unveiling a new senior leadership group that includes no clear potential heirs, raising the chances bigly that he will stay in office beyond 2022. 

His lengthy stay in office was ensured as the rubber-stamp legislative body in March passed a set of constitutional amendments removing term limits for the office of president.

The consolidation of power in the hands of one man is a departure from the collective leadership that guided China through decades of historical and impressive economic growth and consumer stability. Today's top leadership reveal is a return to China's cultural code of imperial command.

He's now seen as so powerful that Forbes ranked Xi as the most powerful and influential person in the world, dethroning Vladimir Putin who held the record for 5 consecutive years.

What does it mean for global business? How will he use this power? Does the C-Suite commit or retreat?

As always, global business and the Davos crowd hopes a stronger Xi will now be able to push through bold economic and financial reforms.

I don't see it.

Xi is beholden to China and not the shareholders of the world's Western-based blue chip companies.

Xi and his party ideologues coined the phrase "Chinese Dream" to describe his overarching plans for China as its leader.

Xi's plans and leadership enhancement does little to change the ethos that to invest and manage a business in China you need fortitude, patience, and need to think in China for China. Capital controls and other investment barriers remain, while debt soars.  

If you sell a commodity and consumer packaged good and service, all is well, and there will be continued access and success in the Middle Kingdom.

If you are a bank, a tech company, an oil exploration concern, a biotech startup, a developer of new energy vehicles, you best buckle-up. Your business model is seen as a challenge to where Xi wants to take China, and the Great Wall just got higher.

GEOECONOMICS

US plans curbs on Chinese investment, citing security risk: Bloomberg reports, under the plan, the White House would use one of the most significant legal measures available to declare China’s investment in US companies involved in technologies such as new-energy vehicles, robotics and aerospace a threat to economic and national security, according to eight people familiar with the plans. Treasury Secretary Steven Mnuchin, in a report scheduled to be released on June 29, will suggest administering that law through an inter-agency government panel called the Committee on Foreign Investments in the US, or CFIUS, the people said, requesting anonymity to discuss the plans.

FT: Trump targets China investments as trade war heats up

WSJ: Trump plans new curbs on Chinese investment, tech exports to China

Politico: Trump gets ready to slap China with investment restrictions, export controls

FT - Editorial: US tariffs pose a danger to the global economy: Innovation and productivity will be casualties from a trade war.

Draft legislation may increase pressure on small Chinese e-commerce firms to fight fakes: SCMP reports, China’s draft e-commerce law may increase pressure on small online retail companies to fight the sale of counterfeit products on their platforms, as lawmakers aim to make internet retail site operators directly liable for such online transactions.

Ozone pollution: Scientists say new production of a banned industrial chemical is damaging the ozone layer. Investigations by the NYT and an independent environmental group led to factories in China.

Expect Xi to aim charm offensive at Abe next: Nikkei reports, China seeks to build 'network of global partnerships' to expand influence.

China cut its required reserve ratio by half a percentage point for some banks, unlocking about 700 billion yuan ($108 billion) of liquidity. 

China is trying to turn itself into a country of 19 super-regions: The planned city clusters are far larger than any others around the world. https://econ.st/2tCtoB8

Japan Times: Japan considers crime prediction system using big data and AI

Nikkei: Trump car tariff threat sends Japan on search for escape route

A 25% levy could mean $21bn in lost earnings for Toyota, Nissan and peers

Saudi Arabia ended a driving ban for women.

FT: Erdogan claims victory in Turkey elections

The Times: Erdogan tightens grip on power as opposition routed

WP: If they needed to fend off war with Russia, U.S. military leaders worry they might not get there in time

"Humvees could snarl behind plodding semis on narrow roads as they made their way east across Europe. U.S. tanks could crush rusting bridges too weak to hold their weight. Troops could be held up by officious passport-checkers and stubborn railway companies."

Salvini’s League makes gains in Italy’s local polls: FT reports, the capture of leftwing strongholds by far-right populists unsettles financial markets.

Bloomberg: Italy wants to put a million electric cars on the road. Price: $10 billion

Policing for Trump visit to Britain will cost £5m: The Times reports, protecting Trump, whose visit is expected to draw mass protests, is expected to require between 5,000 and 10,000 officers working overtime for the visit, due to start on July 12. Riot vans, search dogs for firearms and explosives, helicopters, mounted officers, public order units, protest removal units and evidence-gathering units will join counterterrorism and specialist protection officers to guarantee the US president’s safety. They will need support from civilian staff in control rooms, analysts, researchers and police community support officers to man road closures.

Brexit’s big short: How pollsters helped hedge funds beat the crash: Private polls—and a timely ‘concession’ from the face of Leave—allowed the funds to make millions off the pound’s collapse. https://bloom.bg/2tCm34y

Two years after Brexit vote, British leaders still tied in knots over how to leave Europe https://wapo.st/2ysGcQe

2 years on, Brexit vote has taken a toll on UK economy: AP reports, while it’s still unclear what Brexit will look like when it happens next year, the decision to leave has already had a clear effect on the economy: households are poorer, companies are more cautious about investing, and the property market has cooled.

Nigel Farage’s last laugh: Politico reports, two years after the Brexit vote, the British Euroskeptic and Trump enthusiast is building a second career on social media.

Iceland: From crisis to hotspot, 10 years on from the financial crisis http://bit.ly/2tAwjdB

Mexico’s leftist ‘Amlo’ weighs up Trump challenge: FT reports, would-be president and foreign policy neophyte faces test north of the border.

LAT: Andres Manuel Lopez Obrador, the front-runner in Mexico's presidential race, greats supporters before speaking at a campaign rally in Chihuahua. 

Mexico goes to the polls on July 1.

AMERICAN POLITICS

A trade war with China could hit these communities hardest: WP reports, the latest tariffs announced by China on June 15 would tax goods that accounted for about $45 billion in US exports last year. It’s a tiny speck of the nation’s thriving overall economy. But those tariffs are no broadside threat. They’re targeted with laserlike precision at farmers, ranchers and certain manufacturing workers, as well as at the local economies of rural and small-town America.

“If export markets get shut off, I could see us getting to the point where we’re dumping our milk in the fields. It’ll be a big ripple effect through the state.” -- Jeff Schwager, president of a longtime cheese producer in Wisconsin.

Bloomberg: Harley-Davidson to shift some production of motorcycles out of US after EU tariffs

‘We’re riding a tiger’: The Iowa GOP bets it all on Trump: Politico reports, the president’s trade war could cripple the state, but Republicans trust in him as negotiator-in-chief.

Mattis is out of the loop and Trump doesn't listen to him, say officials: NBC News, on Iran, North Korea and other major issues, the defense secretary has been out of the loop

Impeach Trump? Even Democrats who despise the president can't agree on a strategy for the midterm election: LAT reports, advocates like Tom Steyer see it as the only way to rouse Democratic voters who might otherwise sit out the midterm elections. But many Democrats fear it will antagonize Republicans and spur them to the polls.

The power of Nancy Pelosi: Can the Democrats' polarizing leader chart a path to victory in the 2018 midterm elections? https://rol.st/2tFFzgS

No. She's got to go.

RCP Generic Houe Ballot: DEM +6

ENTERPRISE

Uber is appealing a ban in London.

Tesla may be profitable in the second half of this year partly because of tax credits sold to Nevada casinos. 

General Electric may soon sell its distributed power business division to private-equity outfit Advent International.

ZTE is expected to deposit $400M in an escrow account in a U.S. bank in the "next couple of days," the last step it must take before a ban on US suppliers can be lifted. 

Bitcoin fell below the $6,000 mark on Friday for the first time since February.

Amazon’s private label business is booming.

Apple will fix your broken MacBook and MacBook Pro keyboards for free.

TRENDS

18 wheelers: The trucking industry is about 50,000 drivers short.

CULTURE

HBD: Ricky Gervais, comedian, actor, The Office (2001-03), and writer, 57

LAT: Full vending machines. Pot on the pillow. What some California hotels are doing to attract marijuana smokers. 

SOTD

A Tribe Called Quest - Check The Rhime https://goo.gl/GPwnbB

SPORT

Can the Lakers land LeBron James?

Politics Ensnare Salah and Switzerland at World Cup: NYT reports, Mohamed Salah was said to be considering retiring from Egypt over interactions with a Chechen politician, and two Swiss players caused a firestorm by displaying an Albanian symbol.

Switzerland's Xhaka and Shaqiri charged by FIFA over Serbia goal celebrations: Guardian reports, FIFA has opened disciplinary proceedings against Switzerland’s Granit Xhaka and Xherdan Shaqiri after they celebrated their goals during a 2-1 World Cup win over Serbia in Kaliningrad by performing an Albanian nationalist symbol.

LAT: Argentina's lack of talent and philosophy are making it nearly impossible for Lionel Messi to succeed

World Cup matches today - Matchday 3 of 3:

Saudi Arabia v Egypt @ 10:00 a ET

Uruguay v Russia @ 10:00 am ET

Iran v Portugal @ 2:00 pm ET

Spain v Morocco @ 2:00 pm ET

World Cup teams qualified for the knockout stage (Sweet Sixteen) so far:

Russia
Uruguay
France
Croatia
England
Belgium

World Cup teams that will not advance to the knockout stage so far:

Egypt
Saudi Arabia
Morocco
Peru
Costa Rica
Tunisia
Panama
Poland

World Cup 2018, leading goal scorers:

Harry Kane: 5
Cristiano Ronaldo: 4
Romelu Lukaku: 4
Denis Cheryshev: 3
Diego Costa: 3
Ahmed Musa: 2
Artem Dzyuba: 2
Mile Jedinak: 2
Luka Modric: 2
Eden Hazard: 2
Philippe Coutinho: 2
John Stones: 2

Tim Cook, Golden Boot, Xi Jinping, Election 2018

Tim Cook, Golden Boot, Xi Jinping, Election 2018

Marc Ross Weekly
June 24, 2018
Curation and commentary from Marc A. Ross

Reporting from Alexandria, Virginia

Marc Ross Weekly  = Commentary + Analysis at the Intersection of Global Politics + Policy + Profits

Subscribe here: https://goo.gl/bSQKwA

THREE QUESTIONS

1) Who will win the Golden Boot?

2) Michael Bloomberg plans to spend over $80 million on midterms and help Democratic House candidates, will it make a difference?

3) Gallup figures show most Americans work more than 40 hours a week (the average is 47) and 18 percent work more than 60 hours, how will this trend impact upcoming American elections?

GLOBALIZATION

Tim Cook - Tech's top US-China diplomat

As the US-China trade war smolders, Apple is concerned it will be caught in the middle between powerful interests in Washington and Beijing.

This public affairs environment has led Tim Cook to play diplomat and moved Apple to court China ever more closely. 

Cook's efforts to play diplomat haven't gone unnoticed. Even supply chain partner Foxconn now refers to the company as "Red Apple." 

The New York Times reports, Apple’s China business has grown far more significant than anyone on either side of the Pacific could have anticipated - even the optimists in Cupertino didn't expect this level of success. With 41 stores and hundreds of millions of iPhones sold in the country, there is arguably no American company in China as successful, as high-profile, and with as big a target on its back. 
 
This success in China is a core part of Tim Cook’s legacy. People close to him say his deep China supply chain experience was a massive help in managing China’s bureaucratic and nationalist government.

This business success and commitment to the Chinese marketplace has propelled Apple to be the top businesses diplomat and is the leading corporate to manage the US-China commercial relationship.

Apple realizes America's government wants big tech assembly plants for employment, and China's leaders want R&D investment in innovation. 

Last month Cook visited the Oval Office to warn President Trump that tough talk on China could threaten Apple’s position in the country. In March, at a major summit meeting in Beijing, he called for “calmer heads” to prevail between the world’s two most powerful nations.

The article reports, citing a source, Trump told Cook the US government would not impose tariffs on iPhones assembled in China.

Can "Red Apple" be the key to moving the US-China commercial relationship forward?

DISRUPTION

What global business needs to know about Xi

Earlier this year, Chinese Communist Party big boss Xi Jinping broke with a 25-year tradition by unveiling a new senior leadership group that includes no clear potential heirs, ensuring he will stay in office beyond 2022 and securing a lifetime appointment.

The consolidation of power in the hands of one man is a departure from the collective leadership that guided China through decades of historical and impressive economic growth and consumer stability. Today's top leadership reveal is a return to China's cultural code of imperial command.

What does it mean for global business? 

How will he use this power? 

Does the C-Suite commit or retreat?

As always, global business and the Davos crowd hopes a stronger Xi will now be able to push through bold economic and financial reforms.

I don't see it.

Xi is beholden to China and not the shareholders of the world's Western-based blue chip companies.

Xi's new leadership enhancement does little to change the ethos that to invest and manage a business in China you need fortitude, patience, and need to think in China for China. Capital controls and other investment barriers remain, while debt soars.  

If you sell a commodity and consumer packaged good and service, all is well, and there will be continued access and success in the Middle Kingdom.

If you are a bank, a tech company, an oil exploration concern, a biotech startup, a developer of new energy vehicles, you best buckle-up. 

Your business model is seen as a challenge to where Xi wants to take China, and the Great Wall just got higher.

@carlquintanilla: Percentage of revenue from China:

* Deere: 8%
* Caterpillar: 9%
* Boeing: 11%
* Nike: 12%
* 3M: 13%
* Tiffany: 13%
* Starbucks: 15%
* McDonalds: 15%

(via @TheDomino) @CNBC @SquawkStreet

AMERICAN POLITICS

US voters split on whether tariffs are good for America

When it comes to tariffs and trade - a few campaign rules apply:

1) Where you sit is where you stand

2) Good politics rarely makes good economics

3) China, Brazil, France, Germany, Canada et al. don't have a vote in US elections

4) House elections are more parochial and micro, while Senate elections are broad-minded and macro

Earlier this week, Morning Consult reported thirty-eight percent of registered voters surveyed in the poll said tariffs on Chinese imports would help the US economy, compared to 42 percent who think they’ll hurt the economy. 

In a change of Republican ideology, Republican voters now are more likely to say the tariffs are good for the economy, with 59 percent saying they think they help the United States compared to 36 percent of independents and 21 percent of Democrats.

Regardless of what happens in the coming weeks, trade and tariffs will be an issue on the campaign trail in 2018 and 2020.

The battle between helping some against maximizing for all is the friction point.

Berlin and Beijing know this Amerian political struggle. No doubt teams of political scientists around the world are reading Politico, The Hill, and the Cook Report to determine where tit for tat tariffs will inflict the most pain at the ballot box for Republicans and Trump.

Jamian Ronca Spadavecchia, managing director at the consulting firm Oxbow Advisory and an adjunct professor at Middlebury College, said that the political risks for the administration are likely to be higher if US tariffs contribute to widespread inflation of consumer prices. “The strategy from the other side, whether it’s China or another country, to focus on congressional districts or agricultural products — I don’t know if that’s going to be that effective,” Spadavecchia said in an interview on Tuesday. “China is a big market, but it’s not our only market.”

Sure the tariffs provide a feel-good and sterling campaign trail talking point, but what is the end game?

It is to change business behavior and global commerce imbalances, or is politics for the sake of politics? 

“This is not about a policy,” said Mickey Kantor, the former commerce secretary and a chief trade negotiator for the Clinton administration, in a New York Times article. “This is not about asserting US leadership. It’s about the president having an impulse that if he does this, he will strengthen his base, send a signal to China, and be able to say  he’s been strong and tough.”

The expansion of tit for tat tariffs and reduced international commerce will stunt economic growth. Industries that require global supply chains and cross-border intercompany assembly will be profoundly affected, and pain could be substantial. 

Economists say the tariffs will drive up prices for American consumers purchasing products at retail stores as well as for businesses that depend on China for parts used to make other goods in the United States.

This increase in costs and losing markets is generating local headlines, but the feel-good, standing strong policy (personality) of Team Trump will keep trade and tariffs on the campaign trail in 2018 and 2020.

Plan accordingly.

Turnover in a President's senior staff after one year:

Trump: 34%
Reagan: 17%
Clinton: 11%
Obama: 9%
Bush Snr: 7%
Bush Jnr: 6%

HT: Brookings

10 pressure points shaping today's public affairs environment with 5 ways to respond

10 pressure points shaping today's public affairs environment:

1. Trust in governments and institutions is at a historic low 

2. Global challenges are putting pressure on businesses and governments  equally

3. The future is now - but not all are equally prepared and ready to move forward

4. Bezos et al - America loves entrepreneurial heroes

5. Longtail vs. Hitsville - focus on the long-term, be patient, and serve the smallest most profitable audience possible

6. Brand Marketing vs. Direct Marketing: Be a direct marketer and know that the Internet is a micro-media and a personalized media 

7. High or Low: Stand for something - Don't be in the mushy middle 

8. Big Data > Big Oil: Make great use of your data and double down on what works

9. Get offline and have a conversation. Repeat

10. Make relationships scalable by giving more and asking less

Five ways to respond and make a difference:

1. Provide education: Provide tools, materials, and sessions that educate and improve people's lives, businesses, pet causes - give, give, give, and give again

2. Think experience: Ampily offline experiences into online spaces and take advantage of unique user experiences for different platforms - Insta, Face, Link, Twitter, etc.

3. Produce entertainment: Make your content fun and make sure it grabs attention and is sharable - If you wouldn't send the content to your friends or share on your networks - well then it isn't that good

4. Be entrepreneurial: Champion entrepreneurship, small business, the little guy doing well in the marketplace - America loves the hero story and those who overcome challenges

5. Impart thought leadership: Send messages and press release, and send a lot of them - overwhelm the marketplace. Amazon has posted nearly 50 press releases so far in 2018 (Read Fortune: Amazon's brag and awe press release strategy), and for Twitter alone, you should have 20 posts daily

Plan accordingly.

-Marc A. Ross

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