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Economic Chill Dulls Chinese Appetite for Some Luxury Brands

The designer boutiques of Manhattan and Paris are feeling the chill of a Chinese economic slowdown that has hammered automakers and other industries.

It’s a rude awakening for such designer brands as Louis Vuitton and Burberry that increasingly rely on Chinese customers who spend $90 billion a year on jewelry, clothes and other high-end goods. The industry already is facing pressure to keep up as China’s big spenders, mainstays for American and European retailers, shift to buying more at the spreading networks of luxury outlets in their own country.

Last week, Tiffany & Co. showed how much well-heeled Chinese tourists matter to retailers abroad. Shares in the jeweler known for $5,000 watches and $400 silver baby spoons fell 12 percent after its CEO said they were spending less.

In Hong Kong, the top shopping destination for mainland travelers, only a dozen visitors were in Tiffany’s flagship store one afternoon last week. Many looked without buying.

“The name-brand goods are too pricey,” said Zhou Jiqing, from the neighboring mainland city of Shenzhen. “I’m waiting for the Christmas sale.”

Forecasters including Euromonitor International and Bain & Co. say Chinese customers will be the luxury industry’s main growth engine over the next decade. But this year, shoppers are skittish amid cooling economic growth, trade tension with Washington, and weak real estate and stock markets.

The spending shift could have big implications for retailers who’ve been catering to them and now will have to work even harder to get their dollars. 

“Consumers are just not as excited about spending that kind of money right now,” said Ben Cavender of China Market Research Group.

Demand for Tom Ford suits and Jimmy Choo shoes held up better than some other Chinese spending as economic activity slowed following a government clampdown on bank lending to cool a debt boom.

China’s economy, the world’s second largest, is forecast to grow by a relatively robust 6.5 percent this year, easing from 2017’s 6.7 percent. But that is propped up by higher government spending on public works construction that helps to mask weakness in other areas.

Auto sales in the global industry’s biggest market plunged 13 percent in October from a year earlier. Housing sales are so weak that some developers are cutting prices. The main Chinese stock market index is down 22 percent from a year ago.

Catering to Chinese tastes

Even before the economy cooled, the industry was under pressure from shifts in Chinese tastes and buying habits.

Luxury brands, some of them centuries old, have raced to serve China as its consumers emerged as a powerhouse market.

Brands designed watches, clothes and other goods for Chinese tastes. Hermes created its first single-country brand, Shang Xia, for China. Department stores from London to Los Angeles hired Mandarin-speaking salespeople.

Chinese traders fly home from Paris or Rome with stacks of designer bags and other goods to re-sell.

The incentive to shop abroad has eroded as major brands opened their China stores and prices fell closer to U.S. and European levels.

“Now, lots of world brands have shops in first-tier mainland cities,” said Alex Bi, who was visiting Hong Kong from the mainland city of Guangzhou. He and his sister, Jessica, were window-shopping in the bustling Kowloon district.

At the same time, Beijing has stepped up efforts to reduce reliance on trade and encourage self-sustaining economic growth based on consumer spending. Import taxes on luxury goods were cut to lure shoppers home.

Luxury spending abroad is forecast to keep rising, but not as fast as in China.

The share of spending that goes to retailers in China should rise from one-quarter of last year’s $90 billion to half of 2025’s projected total of $170 billion to $190 billion, according to a Bain report this month. Under that scenario, spending abroad would rise to $85 billion to $95 billion from $67 billion.

Cracking down on imports

Meanwhile, the customs agency is cracking down on informal imports by searching the luggage of travelers returning from Europe and other shopping destinations.

In November, a trader was sentenced to 10 years in prison for smuggling designer clothing from Hong Kong without paying the mainland’s higher import duty, according to news reports.

“This shocked the whole industry. Nobody dares to continue to act as purchasing agents,” said market researcher Li Chengdong of Donge Investment Management Co. in Beijing. “This has an immediate impact on the sales of the overseas retailers.”

Anxiety over possible terrorist attacks has prompted some Chinese to avoid Paris, London and other shopping destinations.

In the United States, retailers face pressure from China’s weak yuan, which makes prices in dollars more expensive for Chinese shoppers.

Changing travel habits

Chinese tourists are also changing the way they tour, forgoing big organized tours that involve taking buses to specific tourist sites including key shopping destinations, according to David Becker, CEO of a Brooklyn, New York-based Attract China, a Chinese travel consultancy. Instead, they’re going on their own, he said. That hurts retailers expecting big busloads of tourists at their front door.

Tighter visa restrictions under President Donald Trump also make it harder for Chinese shoppers to get to the United States, Cavender said.

Chinese tourist arrivals in the United States fell 20 percent from a year earlier to 880,000 in the three months ending in September, according to an estimate by the China Outbound Tourism Research Institute in Hamburg, Germany. The number going to France rose 20.7 percent to 664,800 and those bound for Italy rose 18.9 percent to 850,000.

“If people previously were going to the U.S. to buy an American luxury brand, that’s not their first choice anymore,” Cavender said. “They would rather go to Japan, New Zealand or someplace in Europe where the process is easier.”

Becker says he’s been working with several clients, including designer stores on New York’s Madison Avenue and Brookfield Place, on how to better cater to the Chinese. That includes allowing Chinese customers to use their preferred mobile payments systems, such as Alipay or WeChat.

He says he has heard there’s been some weakening in sales to Chinese tourists in the past three months because of the economy. But he says the political tensions between China and the U.S. haven’t been a factor — yet.

“When your confidence in the economy is off, whether it’s here in the United States or in the China, you’re going to cut back on your overall spending,” he said.  

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Журнал Forbes назвав найвпливовіших жінок світу

Американський журнал Forbes назвав 100 найвпливовіших жінок світу. Восьмий рік поспіль очолює список канцлер Німеччини Ангела Меркель.

Друге місце теж залишилася незмінною у порівнянні з минулим роком, її займає прем’єр-міністр Великобританії Тереза Мей.

На третє місце піднялась директор Міжнародного валютного фонду Крістін Лагард.

До першої двадцятки Forbes ввійшли в основному керівники бізнесу, наприклад, гендиректор американського виробника автомобілів General Motors Мері Барра (4-е місце), головний виконавчий директор Youtube Сьюзен Войчицька (7-е місце) і голова ради директорів фінансово-кредитної групи Santander Ана Ботин (8-е місце).

Більше половини позицій в списку займають американки.

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США погрожують, що можуть вийти із ракетного договору часів Холодної війни через 60 днів

Сполучені Штати Америки заявляють, що вийдуть із договору про ліквідацію ракет малої і середньої дальності часів Холодної війни, якщо Росія не повернеться до виконання умов угоди впродовж 60 днів.

Державний секретар США Майк Помпео оголосив про рішення 4 грудня після того, як учасники саміту НАТО в Брюсселі підтримали звинувачення США на адресу Москви у порушенні положень договору, укладеного у 1987 році.

«Ми сподіваємося, що вони [Росія] змінять курс, але наразі немає сигналів, що вони мають намір це зробити», – сказав Помпео.

Члени НАТО вважають, що Росія розробила і взяла на озброєння ракетну систему 9М729, порушуючи ракетний договір.

Речниця МЗС Росії Марія Захарова, зі свого боку, стверджує, що її країна дотримується положень документа.

Договір про ліквідацію ракет середньої і меншої дальності, підписаний в 1987 році, ліквідував цілий клас ракет наземного базування, як звичайних, так і ядерних, з дальністю дії від 500 до 5,5 тисяч кілометрів.

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У Росії екс-охоронця Яроша засудили до 4 років в’язниці

У Брянській області Росії колишнього охоронця Дмитра Яроша засудили до 4 років колонії за участь у «Правому секторі». Про це повідомили у прес-службі суду.

Шумкова визнали винним за статтею «Участь у екстремістській організації, щодо якої судом ухвалено рішення про заборону її діяльності». У Росії «Правий сектор» є забороненою організацією.

У вироку зазначається, що Шумков з 17 листопада 2014 року до 23 серпня 2017 року брав участь у діяльності «Правого сектору», що була «спрямована проти інтересів Росії».

У вересні минулого року повідомлялося, що колишній охоронець депутата Верховної Ради Дмитра Яроша Олександр Шумков опинився в російському СІЗО.

Мати зниклого чоловіка повідомила виданню «Українська правда» , що на її домашню адресу надійшов відкритий лист зі Слідчого комітету Федеральної служби безпеки Росії в Брянській області, де було сказано, що Олександр Шумков перебуває в брянському СІЗО. За її словами, Шумкова було затримано працівниками ФСБ за підозрою в участі в екстремістських організаціях.

Як повідомляє «Громадське», Шумков служив за контрактом в Збройних силах України в селі Чорнобаївка Білозерського району Херсонської області, жив у Херсоні. Він не повернувся після служби додому 17 серпня 2017 року. Шумков каже, що його викрали, а російський кордон він перетнув проти своєї волі непритомним за участі співробітників ФСБ. 

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Trump: Trade Talks With China Underway

U.S. President Donald Trump said in a series of tweets Tuesday that talks to secure a trade deal with China “have already started” and if a “fair deal” is reached, “I will happily sign it.”

 

Trump’s comments come after leaders of the world’s two biggest economies agreed Saturday in Argentina to not impose any new tariffs on each other’s exports for the next 90 days while they negotiate a detailed trade agreement.

Trump declared himself Tuesday “a Tariff Man” who wants “people or countries” with intentions to “raid the great wealth” of the U.S. “to pay for the privilege of doing so.”

White House economic adviser Larry Kudlow said earlier this week the U.S. won Chinese commitments to buy more than $1 trillion in American products.

The U.S. had a $335.4 billion trade deficit with China in 2017. Trump said on Monday, however, “We are dealing from great strength, but China likewise has much to gain if and when a deal is completed.  Level the field!”

The U.S. leader said U.S. farmers “will be a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!” 

Late Sunday, Trump tweeted that “China has agreed to reduce and remove tariffs on cars coming into China from the U.S.  Currently the tariff is 40 percent.

On Monday, Kudlow said there was an “assumption” that China would eliminate auto tariffs, not a specific agreement.

China’s ministry of foreign affairs said Monday the Chinese and U.S. president had agreed to work toward removing all tariffs.

Trump said he and Xi “are the only two people that can bring about massive and very positive change, on trade and far beyond, between our two great Nations.  A solution for North Korea is a great thing for China and ALL!” 

At his political rallies and news conferences, Trump often praises the increase in U.S. military spending during his nearly two years in the White House.

But he tweeted that “at some time in the future,” Xi, Russian President Vladimir Putin and he “will start talking about a meaningful halt to what has become a major and uncontrollable Arms Race.  The U.S. spent 716 Billion Dollars this year. Crazy!”

The 90-day truce in the escalating trade war between the U.S. and China came during a dinner meeting between the two presidents following the G-20 summit of the world’s biggest economies in Buenos Aires.  For months, the two countries have engaged in tit-for-tat increases in tariffs on hundreds of billions of dollars of exports flowing between the two countries.

Trump, speaking to reporters on Air Force One after the plane departed Argentina, said his agreement with Xi, will go down “as one of the largest deals ever made. … And it’ll have an incredibly positive impact on farming, meaning agriculture, industrial products, computers — every type of product.”

Trump agreed he will leave the tariffs on $200 billion worth of Chinese products at 10 percent, and not raise it to 25 percent as he has threatened to do Jan. 1, according to a White House statement. 

“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial and other product from the United States to reduce the trade imbalance between our two countries,” said White House Press Secretary Sarah Sanders. “China has agreed to start purchasing agricultural product from our farmers immediately.”

Trump and Xi also agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, according to the White House statement.

“Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent,” the statement said.

 

 

 

 

 

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Boat Carrying Rohingya Muslims Lands in Indonesia’s Sumatra Island

A boat carrying 20 men believed to be Rohingya Muslims has landed on Indonesia’s Sumatra island, the latest in a growing wave attempting to flee persecution in Myanmar. 

Myanmar authorities have recently been stopping scores of boats filled with Rohingya migrants attempting to sail to Malaysia. The detained Rohingyas were fleeing cramped refugee camps in neighboring Bangladesh, where over 700,000 of them have been huddled after escaping a brutal military crackdown launched last year in Rakhine state. Myanmar considers the Rohingyas as illegal immigrants from Bangladesh, and have denied them citizenship and other basic rights. 

The United Nations has accused Myanmar’s military of carrying out the crackdown with genocidal intent.

The latest crisis involving the Rohingyas has raised concerns of a repeat of 2015, when scores of Rohingyas were left stranded at sea after Thailand cracked down on regional human trafficking networks in 2015.

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Cambodia Eases Pressure on Opposition, Media after EU Sanctions Threat

Cambodia’s parliament is reviewing a five-year ban on more than 100 members of the main opposition party, which could allow them to return to politics, following threats by the European Union to deny duty-free trading access to the Southeast Asian nation.

The EU last month began a formal procedure to strip Cambodia of its “Everything but Arms (EBA)” initiative, after Prime Minister Hun Sen returned to power in a July general election in which his party won all the seats in parliament.

“To further promote democracy and the rule of law, the National Assembly is reviewing legal provisions to enable individuals who were banned from politics to resume political activities,” Cambodia’s foreign ministry said on Monday.

It was referring to a Supreme Court ban on political activity by 118 members of the main opposition Cambodia National Rescue Party (CNRP), which the court dissolved last year at the request of the government after accusations that the party was plotting to take power with the help of the United States.

CNRP leader Kem Sokha was released from prison in September after spending more than a year in jail on treason charges but remains under house arrest in the capital, Phnom Penh.

The party’s deputy president, Mu Sochua, demanded that Sokha be freed, with all charges dropped and the party reinstated.

“Piecemeal solutions do not and cannot restore democracy. The judiciary must be independent and not a political tool,” Sochua told Reuters.

The crackdown on opposition also coincided with increasing pressure from Hun Sen and his allies on Cambodia’s independent media ahead of the July vote.

The English-language Cambodia Daily shut down last year after the government ordered it to pay millions of dollars in back taxes or face closure. About 30 radio stations were also shut last year.

Washington-based Radio Free Asia (RFA) shut its Phnom Penh office in September, complaining of a “relentless crackdown on independent voices.” Cambodian radio stations were banned from broadcasting U.S.-government backed Voice of America (VOA).

The government “always cherishes promotion of freedom of press and freedom of expression,” the Foreign Ministry added in Monday’s statement, saying the RFA and Voice of America were free to reopen their offices in Cambodia.

Cambodia should “allow both RFA and VOA programs to once again be broadcast freely on Cambodian radio stations, consistent with the government’s stated commitment to a free press,” U.S. Embassy spokeswoman Emily Zeeberg said in a statement on Tuesday.

RFA spokesman Rohit Mahajan said that before RFA can consider resuming operations in Cambodia a number of issues would have to be resolved, including the dropping of charges against two former RFA journalists.

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In ‘New Malaysia,’ Race Continues to Cast a Long Shadow

Just months after a stunning election victory, Malaysia’s prime minister has had to step in to mollify the country’s majority Malay Muslims in recent weeks, underlining a weighty challenge confronting his multi-ethnic, reformist coalition: race.

When riots erupted at a Hindu temple outside the capital, Kuala Lumpur, last week, 93-year-old Mahathir Mohamad spared no effort to scotch speculation that tensions with Malays were to blame.

Just a few days earlier, his government reversed its pledge to ratify a U.N. convention against racial discrimination following a backlash from groups who argued that it would dilute privileges Malays have enjoyed for decades.

The two incidents illustrate the predicament confronting Mahathir as euphoria over the May election fades: curbing racial divisions, carrying out reform and reassuring Malays that affirmative-action policies favoring them in business, education and housing are not about to disappear.

And Mahathir’s unlikely alliance – known as Pakatan Harapan, or Pact of Hope – has to do that without upsetting the delicate balance of its constituent parties.

“The problem with Pakatan Harapan as a multiracial coalition is that it is not seen as championing the Malays,” said a deputy minister, who asked not to be named due to the sensitivity of the issue.

He said opposition parties are successfully fanning a perception that Malays, about 60 percent of the country’s 32 million people, are being abandoned in what some have called ‘New Malaysia.’

Malaysia’s ethnic Chinese are estimated at 23 percent while mostly Hindu ethnic Indians comprise about 7 percent, government data shows.

Mahathir ousted the long-ruling coalition led by the United Malays National Organization (UMNO), which has pushed positive discrimination for Malays to avoid a repeat of bloody Chinese-Malay riots in 1969. Mahathir was prime minister for two decades at the head of UMNO, before he fell out with his successors.

In the May election, Mahathir’s coalition won overwhelming support from ethnic Chinese and Indian minorities, but it secured the votes of only 30 percent of Malay voters, according to estimates by independent polling firm Merdeka Center.

About 40 percent of Malays backed the beleaguered government of former Prime Minister Najib Razak, an UMNO grandee who is now facing multiple graft charges, and the rest voted for Parti Islam Se-Malaysia (PAS), a conservative Islamic party.

A Merdeka poll in August showed that concerns over ethnic issues and religious rights had grown since the election, with about 21 percent citing those issues as a concern compared with 12 percent in April.

Which crowd to please?

For many Malays, the ouster of Najib over the multi-billion-dollar corruption scandal that had swirled for years around the 1Malaysia Development Berhad (1MDB) sovereign wealth fund was fair enough.

But some have been dismayed by moves made by the government of Mahathir — himself once a champion of the Malay ‘bumiputera,’ or ‘sons of the soil’ policy — such as the appointment of non-Malays as minister of finance and attorney general.

A lawmaker in the ruling coalition said the initial plan to ratify the U.N. International Convention on the Elimination of All Forms of Racial Discrimination fed a narrative pushed by UMNO and PAS that the government is out of touch with the Malay community, especially the working class.

“The Malays are more focused on socio-economic issues, and if you don’t focus on their poverty and hardships, obviously they’ll get worked up,” said the lawmaker, who asked not to be named because he was not authorized to speak to the media.

Mujahid Yusof Rawa, minister in charge of religious affairs, conceded that the coalition is struggling to convince Malays that its policies will benefit them and protect Islamic values.

“We have had some success in reaching out to them, but if we fail to build on that, it will affect support from Malay voters,” he said.

Mahathir, who was prime minister from 1981 to 2003 and is now the oldest elected leader in the world, remains a sharp political operator: many expect he will take steps to shore up Malay support for his government.

It was Mahathir who snuffed out controversy over the U.N. treaty by dropping it, and amid the Hindu temple unrest he promised action to keep the peace, acknowledging that “such incidents … can lead to bigger problems involving racial harmony.”

His administration has also refused to deport an Indian Islamic preacher, Zakir Naik, who is popular among conservative Malay Muslims but is being investigated by Indian authorities for alleged hate speech. Naik began a five-day speaking tour in a northern state last week.

But steps that pander to Malays could create rifts within Mahathir’s alliance, which includes the Chinese-led Democratic Action Party and the pro-reform party of former deputy prime minister Anwar Ibrahim. There is an understanding that Mahathir will eventually hand power to Anwar, but the two men have fallen out before.

“As things currently stand, the Malay opposition are saying the government is being dominated by the Democratic Action Party and weak on Malay interests and that it is delivering far less than promised,” said Ibrahim Suffian, director of pollster Merdeka. “The danger is that if they try to please one crowd, they push away the other.”