Japan largely missed the PC/mobile/internet wave decades ago.
In retrospect, Japan was in “competition” with the US in memory chips etc.
Microsoft chose Beijing as its APAC research center back in 1998.
Now in 2024, Microsoft chose Japan to invest billion of dollars for AI and cloud.
And China is in “competition” with the US in AI and other tech.
China risks losing behind in AI, mostly as the most powerful chips are not allowed to be sold to China.
A coin has two sides.
A balance sheet has two side.
If there is a hit on the asset side, there must be a hit somewhere else.
When properties are not selling, the property linked trust products would take a hit.
PingAn Trust is not responsible for those products’ underlying assets, which are troubled developers; it’s like an investment bank that packages products and sells those to “retail investors”.
Maybe many of those “retail investors” are not sophisticated enough.
In China, anyone with 500k rmb annual income can become a “qualified investor”, vs. $200k in the US, only ~1/3.
In China, if you have 5mn rmb financial assets (not net assets), or 3mn rmb net financial assets, you could become a “qualified investor”, vs. $1mn net worth (not counting primary residence) in the US.
Someone can borrow against the house and buys financial assets? Sure. He/she may get a >5mn loan from a tier-one city home (a 100+sqm home can be easily over 10mn rmb during good times).
It’s such a perfect designed chain of problems when property prices are coming down.
Fast fashion companies are sometimes criticized as environmentally unfriendly.
Intuitively, this seems right.
But exactly how?
It seems that the production process (incl. dyeing and finishing) is not very environmental friendly, with energy & water consumption in question.
E.g. – “Most of these impacts are a direct result of apparel’s reliance on hard coal and natural gas to generate electricity and heat in key processing locations. Asian countries such as China, India and Bangladesh not only comprise the largest manufacturers, but also have heavily coal-based energy mixes.”
And there is microplastic issue.
When people throw away more clothes at a faster rate.. not looking nice.
Sustainable and circular textiles sounds good.
Maybe this would become an issue for companies like Shein, Revolve etc.
Shein is about to IPO, with sales of about $45bn in 2023.
What about using some of the proceeds to be more sustainable? Don’t just go for GMV growth.
At the end of 2022, Abbott Laboratories announced the gradual exit of mainland China’s infant formula market throughout 2023.
Abbott had ~3% market share.
How other international brands were doing in 2023?
Nestle’s Greater China business overall saw 4.2% organic growth in 2023, citing positive growth in Infant Nutrition.
Danone (Aptamil brand) saw market share gain in 2023, with 8.3% yoy like-for-like growth in specialized nutrition in China, North Asia & Oceania.
A2 grew 10.4% yoy in 23H2 (FY24H1) for its China label products, and 16% yoy in 23H1 (FY23H2).
Read previous post on a $360 billion Tesla.
Although production number is flattish, Tesla q1 delivery number is worse than expected.
China reported wholesale number for Tesla is 89,064 for March (+0.2% yoy) and YTD is -3.7% yoy.
However, this wholesale number from China doesn’t mean cars have been delivered to customers.
Europe’s reported monthly number points to yoy growth of 40% for the first two month, but March was disrupted so won’t keep up the growth.
US customers are still facing super high interest rate on auto loan.
Tesla recently hiked the price, which indicates a change in strategy to protect profits, in-line with Tesla’s move to drop volume guidance for the year.
As price competition is fierce in China, lower some price for volume won’t help Tesla’s China profit much. Some target/core customers also won’t go away if Tesla raised some price (low price elasticity).
But fundamentally, I think Xiaomi is doing similar things as Nio or XPeng did. Difference is that Xiaomi is more efficient, has larger scale / fan base etc.
There seems to be a more diverse purposes of stock prices theses days.
And trading prices are really interesting political/geopolitical storytellers.
Here are some recent examples:
1/ $DJT: This is obvious as the name of the company indicated. The financial obligation that Trump is facing also makes the market cap important.
2/ $META: This is partially an indicator of TikTok ban sentiment/probability I feel.
3/ $INTC: Bringing back high-end semi mfg to the US.
One could argue that the prices are moving based on narratives, rather than earnings; however, it’s true that different policies could change companies’ fundamentals in a big way.
Such an interesting book.
Some takeaways: