Global Business Development

“The EGS GlobalTeam™ 4/29/2020

 

Our U.S. based Team has living experience in 18 countries and working business experience in 60+ countries. Our GlobalTeam™ on the ground covering 40 countries provides international expertise, market research, management consulting and in-country operations support.

 

 

The EGS GlobalTeam™ provides:

In-country Compliance Audits & Controls – Regular visits to a U.S. company’s in-country units performing on-site inspections, with detailed reporting.

In-country Mystery Shopper – Personal visits to the brand’s local units, with a detailed report covering all aspects of the shopping experience.

In-country Emergency Solutions – An in-depth review of the local partner’s business operation with recommendations of options to restore profitability.

Country Market Research – Competitor analysis, political, regulatory and economic analysis

Feel free to reach out to Bill Edwards, CEO of Edwards Global Services, Inc., (EGS) to ask questions or share best practices at +1 949 375 1896 or bedwards@edwardsglobal.com.


Asia Biweekly Business Update Blog – 4/27/2020

(This is an update of our March 9, 2020 China Blog which now will cover Asia)

Bill Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 45 years, including living in China, Hong Kong and Indonesia. EGS is currently helping U.S. brands enter Cambodia, Mainland China, Hong Kong, Indonesia, Korea, the Philippines and Thailand. Our U.S. Clients are all consumer-faced franchise brands.

The following are extracts from a variety of information sources and our Associates across Asia on consumer-focused issues during the COVID emergency.

Introduction

Mainland China and South Korea are seeing businesses starting to reopen. Singapore and Malaysia remain shut down. Indonesia and the Philippines are allowing restaurants to do takeaway and delivery only. Japan is mixed. Vietnam has done a good job controlling the virus and will soon allow businesses to reopen. Thailand will start reopening the week of May 4th. Ramadan, which lasts until May 23rd, is a challenge for businesses in Indonesia and Malaysia.

Asia General

“From coffee in Hong Kong to burgers in Malaysia and Ramadan in Singapore – here’s how Asia’s small businesses cope with Covid-19. Asia’s SMEs are rising to the challenges posed by the coronavirus by adapting their business models and focusing on the positives. Here are five case studies, taken from across the region, of how SMEs are adapting to the challenges posed by Covid-19 – and proving that even the smallest of businesses can have the biggest of hearts.” South China Morning Post, 4/25/2020

https://bit.ly/SMEsAsiaAdapt

“In Indonesia, the world’s most populous Muslim country, hundreds of millions are unable to congregate during the holy month of Ramadan. Muslims in neighbouring Singapore and Malaysia are also having a more solemn Ramadan as Covid-19 social distancing rules are enforced.” South China Morning Post, April 24, 2020

https://bit.ly/MelancholyRamadan

Mainland China

“Co-founder of Microsoft Bill Gates announced that stores of the company in China had resumed their operations that may be a concrete example of how society may return to ‘business as usual.’ Microsoft already sent thousands of its workers back to China, where they would resume their posts and comply with precautionary measures to prevent the spread of the pandemic.” Business Times, April 24th, 2020

AmCham China has released the results of a second Flash Survey that evaluates the impact of the COVID-19 outbreak on its member companies. Almost 120 companies responded to the survey. Roughly half of the surveyed members say they are experiencing significant revenue declines, compared with 28% last month. 39% of companies report a drop in demand for their products, up 6 percentage points from last month. 60% (up 10 percentage points month-on-month) said 2020 revenues will decline anywhere between 10% and 50% or more if business cannot return to normal before August 30. Read the full AmCham China Quarterly report at this link:

https://bit.ly/AmChamChinaQuarterly

Indonesia

“Indonesia to ban air, sea travel to end-May: officials. Indonesia will temporarily ban domestic and international air and sea travel, with some exceptions, starting this week to prevent a further spread of the coronavirus, the transport ministry said in a statement on Friday. The announcement came as the holy month of Ramadan began in the world’s largest Muslim majority country, and the government has already banned citizens’ traditional annual exodus from the cities to the provinces during the holiday period.” Reuters, April 23, 2020

https://reut.rs/2Kxl0f4

“With most schools and universities in Jakarta (Indonesia) shut down even before official rules on social distancing went into effect, the transition has been sudden and uncertain for many. With Large Scale Physical Distancing extended in Jakarta until at least May 22, schools will continue to function online. AmCham (Indonesia) held a special forum on the situation on Thursday, April 23, to look at the challenges for schools, students and parents.” Learn more about the conference findings at this link:

https://bit.ly/AmChamIndonesiaSchools

Japan

“In recent weeks, the number of covid-19 cases has increased, and Prime Minister Shinzo Abe has called for an 80 percent reduction in person-to-person contact. Yet, some pachinko parlors refuse to close. Earlier this month, Tokyo Governor Yuriko Koike included pachinko parlors, along with bars and clubs, in the establishments she was requesting shut down to reduce the spread of the novel coronavirus. Many pachinko parlors followed the request, but some did not.” Kotaru, April 23, 2020. See pictures the lack of social distancing at this link:

https://bit.ly/JapanCOVID

“Japan’s new economic stimulus package in response to the coronavirus pandemic is estimated to boost real gross domestic product by about 4.4%, Economy Minister Yasutoshi Nishimura said on Friday. Japan has boosted its new economic stimulus package to a record $1.1 trillion to expand cash payouts to its citizens, as the fallout from the coronavirus pandemic threatens to push the world’s third-largest economy deeper into recession.: Reuters, April 23, 2020

https://bit.ly/JapanStimulus

Malaysia

Malaysia has one of the highest COVID cases and death counts in Asia. Essentially all business is closed. A major challenge for the Ramadan period.

“The (Malaysian) Prime Minister announced that the MCO (movement control order) which was first imposed on March 18 to 31 and later continued with a second phase from April 1 to 14, and a third phase from April 15 to 28 – would be on for a further two weeks. The government, said the Prime Minister, was considering allowing more specified sectors and sub-sectors to resume operations but subject to strict conditions to ensure the people’s health and safety.” The Star, April 23, 2020

https://bit.ly/MalaysiaShutDownExtended

Philippines

In the Philippines, the almost total business lock down is slightly easing. Some Chili’s® and Denny’s® restaurants have reopened for takeaway and delivery. But local sources say the Manila government has issued passes, only one selected member of each household is permitted to go out for food, groceries and to pharmacies.

“The coronavirus outbreak will likely send the Philippine economy into its first annual contraction in more than two decades this year, before it pulls back up for a U-shaped recovery in 2021, the central bank governor said on Saturday. Key cities in the Philippines, among the fastest growing economies in Asia during the pre-pandemic period, are under strict quarantine measures since mid-March. Philippine gross domestic product would likely shrink by 0.2% in 2020 before bouncing back to about 7.7% as policy support measures gain traction, central bank Governor Benjamin Diokno said in a statement.” Reuters, April 25, 2020

https://reut.rs/2VYkHzs

Singapore

Singapore has been under a partial lockdown since April 7 that may be extended past May 4 due to the recent jump in coronavirus cases in migrant workers.  Many businesses, especially F&B, are suffering and may have to close for business due to the Covid-19 pandemic.  The Singapore government has come out with a S$60 billion (US$40+ billion) budget to help businesses, employers, employees, & citizens.

South Korea

Churches, bars, gyms, restaurants are starting to reopen. Travel is not doing well. 400 McDonald’s are open for drive through. From 900 new COVID cases on February 29th, there were 8 new cases on April 23rd.  “Amid the rapid changes caused by COVID-19, there is optimistic recovery progress of American businesses in Korea. Many companies are adapting quickly and finding success in unexpected ways amid these times of uncertainty.”  James Kim, Chairman and CEO of AmCham Korea.  This link is to a CNBC interview with Mr. Kim:

https://www.youtube.com/watch?v=0l3oVv2wJYo&t=2s

Early in the coronavirus timeline, Korea created an app that kept track of infected people. It prohibited large gatherings and required virtual church services. Key was wide spread testing. They even had an election.

https://bit.ly/KoreaElection

Thailand

AMCHAM Thailand had a Video Conference on April 22. Here are some of takeaways: The ban on sale of alcohol beverages has been extended until the end of the month (April 30) to discourage further social gatherings. All foreigners have been granted automatic visa extension for another 3 months until July 31. It is estimated that Thailand will end the year with just over 16 million international tourists, far below the 40 million goal. However, they have stated that tourism activities in Thailand could resume as early as May. AmCham Thailand members remain vastly positive toward the measures taken by the Thai government to curb the spread of Covid-19. See the full results are the link below:

https://bit.ly/AmChamThailand

Although the number of new COVID-19 cases in Thailand had a sharp drop to 15 cases on 26 April 2020, the state of emergency is extended another month to end on May 31, 2020. The Centre for Covid-19 Situation Administration (CCSA) issued the guideline of the preparation to reopen the businesses under the Covid-19 situation. High-risk business such as bars, pubs, entertainment venues will remain closed. Medium-risk business such as barber shops, spa, restaurants, department stores and shopping malls would be allowed to reopen gradually.  All airports in Thailand are expected to resume their services on the 1st of May after they have closed temporary for a month.

The Thai Cabinet approved a stimulus package for soft loans to help businesses. For example, a 6-month debt moratorium on principal and interest for SMEs. “Seth” Sethaphong Phadungpisuth, CFE, Managing Director of Gnosis Company Limited, Thailand.

Vietnam

Sean Ngo, CEO of VF Franchise Consulting based in Ho Chi Minh City, reports on LinkedIn that Vietnam will be one of the first, if not the first country, in Southeast Asia to cautiously lift the lockdown. Social distancing, temperature checks at businesses, and better hygiene practices will not change. See the full US News report at the following link:

https://bit.ly/VietnamCovid

In Summary

We keep our thumb on pulse of the Asia business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. We will update this Asia business climate blog about every other week.

Feel free to reach out to Bill Edwards, CEO of Edwards Global Services, Inc., (EGS) to ask questions or share best practices at +1 949 375 1896 or bedwards@edwardsglobal.com.

“It is not the strongest or the most intelligent who will survive but those who can best manage change”. Darwin


China Blog Update – 4/13/20

(This is an update of our March 9, 2020 China Blog)

Bill Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. He has been the Master Franchisee for a U.S. franchise in China. EGS opened an office in Beijing in 2014 and we are currently helping four U.S. brands enter the Mainland China market. Our U.S. Clients are all consumer-faced franchise brands.

Needless to say, things right now are different than ever before. The following are extracts from a variety of information sources and our network inside China on consumer-focused issues post the Wuhan Event.  This is bipartisan and does not reflect a point of view.

Employment

“The official urban unemployment rate of 6.2 per cent in February understates the true level of joblessness and doesn’t include China’s 280m migrant worker population, many of whom haven’t returned to work yet. Close to 500,000 small and medium-sized businesses, the heart of the economy, which were sidelined politically before the crisis, are reported to have failed in the first quarter alone., Financial Times, April 10, 2020

Consumers Trends

Burger King, Dairy Queen, KFC, McDonalds and Starbucks closed over 7,500 restaurants in China by the end of February. Today, over 90% of these restaurants are back open.

Our company’s Managing Director for Greater China based in China says, “the businesses of China have recovered about 60-90% depending on the region. We are still required to wear face masks everywhere and practice social distancing (which is not common in a densely-populated country). Domestic travel is still difficult because place to place travelers have to be quarantined back and forth. Retail, fitness and F&B businesses will need 3-6 months to return to normal levels as people still prefer to eat at home and order in as they did for more than 40 days in February and March. Schools and universities will not start up again until September for the new school year.

“Shopping malls and stores in China have quickly reopened as the government promotes a return to business as usual, only to see consumers stay home and keep their purse strings tight or shop online. Customer traffic is ‘less than half of usual levels’ said a worker at a Walmart store in a Shanghai suburb late last month. The government has in recent weeks highlighted a brisk recovery in business activity, touting efforts to contain the new coronavirus. Shopping centres and restaurants that had closed to stem the outbreak’s spread have rushed to reopen. About 80 per cent of restaurants and more than 90 per cent of commercial facilities have resumed business across China, according to the Ministry of Commerce. But consumers, increasingly wary of government pronouncements and state media, do not feel safe going about their business as usual” Extracts from an article by the Financial Times on April 11, 2020

Life does go on. Yum China Holdings, Inc.‘s newly-acquired controlling interest in the casual-dining brand Huang Ji Huang group, a simmer pot concept, and emerging fast-food restaurant San Fen Bao, to its portfolio. Founded in 2004 and headquartered in Beijing, Huang Ji Huang has over 640 restaurants in China and internationally. Following the acquisition, Yum China will establish a ‘Chinese dining business unit’ comprising three core Chinese dining brands: Little Sheep, East Dawning, and Huang Ji Huang. “Global Franchise’, April 8, 2020

Good news for Chinese small businesses. “Insurance companies in China are taking on an unusual mission: They are promising to cover business losses from the coronavirus pandemic, as hundreds of millions of people return to work, and the country tries to rev up its economic engine. Since February, dozens of Chinese property-and-casualty insurers have rolled out new policies or expanded existing ones to provide compensation when workers contract Covid-19, the respiratory disease caused by the new coronavirus. The insurance payouts would help companies that are forced to close temporarily if staffers fall sick, other employees have to be quarantined and business activities are disrupted. Some of the policies are provided free-of-charge by insurers, while others have low premiums that are subsidized by local governments. Many sellers of coronavirus-related coverage are state-owned insurers, which can likely fall back on state support in the event of major losses.” Wall Street Journal, April 10, 2020

Most Chinese factories are now back to operating at around 80% of capacity. Some are pushing 100%. Foxconn, the Taiwanese contract manufacturer which assembles the majority of Apple’s iPhones in China, says that with the help of tests for the virus and chest x-rays it has been able to get all its operations on the mainland back up and running with no risk to the health of its workers. In a call to investors on April 1st it reported that it was on target to provide Apple with all the 5g iPhones it needs for the launch of the device this autumn. Many of the measures that made China’s great reopening possible were boring-but-important changes to existing protocols; more hygiene measures, more separation between workers, and screening (companies in China and elsewhere are trying to get their hands on a lot of tests for sars-cov-2 infection). The Economist, April 8, 2020

“Chinese consumers are shopping again, in a timely boost for the beleaguered economy, as they regain some semblance of normal life after unprecedented lockdowns aimed at containing the coronavirus pandemic. Demand for travel, cosmetics, outdoor gear and food has surged in recent weeks as policy-driven stimulus kicked in, workers returned to offices and factories and the government started easing restrictions on people’s movement. Transport bookings rose more than 50 per cent, while hotel reservations increased by 60 per cent during the three-day tomb-sweeping Ching Ming Festival through April 6, according to Trip.com Group. Online retail orders have likewise boomed, according to e-commerce site Pinduoduo. South China Morning Post, April 8, 2020

Savills China Retail believes that China’s retail sector will fully recover by the second half of the year, once as the country has recouped from the COVID-19 pandemic, reported Retail News Asia. Entertainment centres, shopping malls, restaurants, and gyms that were affected by the government-mandated lockdown in late January are predicted to flourish post-coronavirus, as consumers cautiously retreat back to their old shopping habits. At present, shopping malls in Shanghai have 30 percent fewer shoppers compared to before the outbreak. However, starting today, malls will return to their regular operating hours, from 10 AM to 10 PM, and most retail tenants will reopen to the public.  Since the reopening, some sources have already revealed long queues outside fashion stores in IAPM mall, as well as difficulty in finding parking slots and seats at coffee shops.  Even though some restaurants have permanently closed due to the unaffordability of labour and rent costs during the outbreak, those who did survive were allowed to reopen as soon as they have reapplied.: Source: Property Guru Report, early April.

Car Sales

(Car) “quarterly sales declined 42% on year to 3.7 million vehicles, the government-backed China Association of Automobile Manufacturers said Friday. While demand started to return in March as China’s epidemic situation stabilized, sales for that month were still down 43% on year at 1.4 million vehicles. Sales had plunged 79% in February.

The rebound is already struggling to sustain its momentum. The increase in visits to dealerships trailed off in April, said Lin Huaibin, an analyst at IHS Markit, as Chinese consumers—their confidence still fragile—watched the virus ravaging the U.S. and Europe and realized the scale of the crisis facing the global economy. This fresh “demand shock” would cause auto sales to fall by about 14% this month from the same period a year earlier, Mr. Lin said, compared with a very weak April 2019, when sales fell 15% on year.

Government and Landlord Support

Just in from Deloitte:  The Chinese central government has unveiled a raft of measures to support the market amid the novel coronavirus pneumonia outbreak. The support plan for SME’s mainly includes:

  1. Easing tax burden: on individuals and corporations
  2. Financial support: increase credit supply, reduce difficulty and cost of loan applications
  3. Stability of employment: delay collection of social insurance premium.

Also, property developers/landlords, including Wanda Group, China Resources, Poly Group, Country Garden, etc. have announced waiving rent for tenants for 1-2 month durations.

Travel

 “United UAL Airlines could announce it will soon resume passenger flights to China, which is rebounding after strong measures brought the coronavirus outbreak under control. United would likely fly between San Francisco and Shanghai Pudong. Demand is increasing for United as business resumes in China and its U.S. corporate customers re-establish supply chains.” Forbes, April 10, 2020

But….” Hotel stay in Beijing only with negative corona test from April 12. In order to stay in a hotel in Beijing from April 12, guests will have to provide a negative result of a nucleic acid test that was taken within the last 7 days as well as national or Beijing health codes that show no abnormal status. China Legal Services, April 10, 2020

 In Summary

We keep our thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. We will update this China blog about every other week.

Feel free to reach out to Bill Edwards, CEO of Edwards Global Services, Inc., (EGS) to ask questions or share best practices at +1 949 375 1896 or bedwards@edwardsglobal.com.

“It is not the strongest or the most intelligent who will survive but those who can best manage change”. Darwin


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