GIF by Jia Guo. View pronunciation video from Jia.
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Dear reader,
We’ve got just three things for you at the top and a boatload of links below.
Two events coming up in New York:
November 11: The Chinese Finance Association’s 24th annual conference, “U.S.-China Relationship Rollercoaster, Blockchain-Crypto Turbulence: Where Is the Global Economy Heading To?” Speakers include a number of luminaries in the U.S.-China business community.
November 13: SupChina’s “Women's Network Monthly Series: Healthcare & Innovation,” featuring guest speaker Ingrid Yin, Ph.D., a cofounder of MayTech Global Investments and a winner of the 2018 SupChina Female Rising Stars Award. Our theme is innovation in medicine and biosciences in China. Only a handful of tickets are left!
—Jeremy Goldkorn, Editor-in-Chief
1. ‘Air mess’ is all right
Agence France-Presse reports on glad tidings for French luxury brand Hermès, pronounced “air mess,” as a member of the Hermès family told me sometime ago in Beijing:
French fashion house Hermès reported Wednesday November 7 another quarter of brisk sales growth, propelled by red-hot demand in China, where the ultrachic brand expects further growth as it opens stores and rolls out online sales. The company said sales in the third quarter climbed 9.4 percent to 1.46 billion euros (US$1.68 billion), racking up higher sales in all the regions where it operates.
But it was Asia excluding Japan, which has become the group's biggest source of revenue, that set the pace, with sales jumping 11.8 percent to 519 million euros.
The results reassured investors who had worried that trade tensions between Beijing and Washington could hamper sales of Birkin, Kelly and other hot Hermès handbags to eager Chinese customers.
"We have not seen any change of rhythm in China for now," executive chairman Axel Dumas said during a conference call.
Meanwhile, Jing Daily reports:
L’Oreal CEO Jean-Paul Agon says the company’s beauty brands appear to be insulated from the U.S.-China trade war.
“Sales in China are flying, especially in luxury, and we have seen this now for a long time, and it’s going on,” Agon said. He added that the company is gaining market share in the country as well.
—Jeremy Goldkorn
2. Trade war, day 125: Pessimism surrounding U.S. elections, Singapore summit steals Shanghai trade fair’s thunder
Any hopes in Beijing that Democratic Party gains in the U.S. midterm elections would have some beneficial effect for China on trade issues are looking dim. At best, things won’t get any worse.
- "Partisan Democrats traditionally have been the more protectionist party while Trump Republicans are extremely hawkish with regard to everything relating to China,” David Adelman, former U.S. ambassador to Singapore, told CNBC. And, in any event, the power to impose tariffs remains an executive privilege, even if there was greater support for Democratic candidates “visible in other parts of the country considered to be particularly vulnerable to fallout from the trade war.”
- The pessimistic tone at the Bloomberg New Economy Forum in Singapore looks to be overshadowing the positive spin and hype surrounding Xi Jinping’s trade fair in Shanghai. Former U.S. Treasury secretary Henry Paulson warned of a looming “economic Iron Curtain” that threatens to fall between the U.S. and China.
- Paulson, a longtime optimist on American engagement with China, said he is “very sobered by the trajectory we are on now,” and called for a greater commitment by China to reform and opening up while the U.S. should “dial down the rhetoric” and recognize that “China does not pose an existential threat to American civilization.” He added:
If the U.S. and China cannot find a way to develop a workable consensus, it will pose a systemic risk of monumental proportions — not just to the global economy, as I dealt with, but to international order as we know it and to world peace.
- Meanwhile in Shanghai, the China International Import Expo, part of Xi’s response to the trade crisis, claims to have attracted 400,000 buyers, including “representatives from nearly all of China's state-owned enterprises.” However, it’s not clear how much the buyers are actually buying, or whether deals would have taken place without the expo. The Wall Street Journal (paywall) notes that more than 180 U.S. firms are attending, but their CEOs are notably absent amid the trade war.
- American executives are also reported to be skipping China’s big technology powwow in nearby Wuzhen, which in previous years boasted attendance by the heads of Apple and Google. “Foreign tech firms might feel that under the current political environment, it’s not ideal to be seen as overly cozy with China,” Mark Natkin, managing director of the Beijing-based Marbridge Consulting, told the Financial Times (porous paywall).
Other trade-war-related news:
—Sky Canaves
3. Chinese university draws controversy after sending students’ grade reports to parents
Shenzhen University in Guangdong Province has found itself embroiled by controversies around its decision to mail detailed transcripts directly to parents without informing the students.
As reported (in Chinese) by Shenzhen Evening News, the issue came to light when a group of anonymous students filed a complaint on WeChat in late October. They claimed that it totally caught them off guard when their parents received packages mailed by the school at the end of the semester, which included detailed reports about their academic performance, explanations about grading, and instructors’ contact information. They told the newspaper that they were asked by the college to provide their home addresses for “security purposes,” but it apparently didn’t turn out the way they expected.
“I saw my roommate having a hard time explaining her grades to her mom. I’m a bit nervous now,” a student said on social media while anxiously waiting for her package to arrive. “I wonder if I will receive a call from my dad tonight.”
Click through to SupChina for more details.
—Jiayun Feng
