China threatens Calvin Klein owner with blacklist over cotton boycott...China unleashes stimulus blitz...Leapmotor, Stellantis open EU EV orders
China threatens Calvin Klein owner with blacklist over cotton boycott
China has accused the parent company of Calvin Klein of boycotting cotton from its western Xinjiang region, threatening for the first time to put a US company with significant interests in the country on a national security blacklist, reports the Financial Times. Beijing’s threat to include PVH, a clothing maker whose brands include Calvin Klein and Tommy Hilfiger, on its “unreliables list” is likely to alarm international companies at a moment when China is struggling to attract foreign investors.
The Chinese commerce ministry said in a statement on Tuesday that PVH had 30 days to explain to authorities whether it had discriminated against Xinjiang-related products over the past three years.
In a separate notice, the ministry accused the group “of violating normal market trading principles and unreasonably boycotting Xinjiang cotton and other products without factual basis.”
China unleashes stimulus blitz
China has unleashed a swath of stimulus measures including cuts to its benchmark interest rate as Beijing battles a slowdown in the world’s second-largest economy, reports the Financial Times. In a rare public briefing on Tuesday, the People’s Bank of China also announced government funding to boost the stock market and aid share buybacks, as well as more support for the stricken property sector.
With economists sceptical about whether China will hit the government’s full-year growth target of 5%, PBoC governor Pan Gongsheng said the measures aimed to “support the stable growth of China’s economy” and “promote a moderate rebound in prices.”
The package of measures sent China’s CSI 300 index of Shanghai- and Shenzhen-listed shares up 4.3% on Tuesday, its best day since July 2020, although it remains down 1% since the start of the year. Hong Kong’s Hang Seng index rose 4%, led by mainland Chinese companies listed in the territory.
Leapmotor, Stellantis open EU EV orders
China's Leapmotor is set to start taking orders in Europe for a city car and an SUV, the automaker and its partner Stellantis said on Tuesday, as they expand their budget electric vehicle (EV) offering in the region, reports Reuters. Stellantis holds a 51% stake in their Leapmotor International joint venture and has exclusive rights to build, export and sell Leapmotor products outside China in the first such arrangement for a legacy Western automaker.
The T03 compact car will be available from the end of September with prices starting from €18,900 ($20,990) while the C10 SUV will be in dealerships in October starting from €36,400, the JV said in a statement.
The two models were showcased for the first time in Europe near Milan on Tuesday. Initially imported from China, the T03 will also be assembled in Europe, at Stellantis' Tychy plant in Poland, potentially helping the brand avoid European Union tariffs on imported Chinese EVs.
TikTok to close music-streaming business
ByteDance’s TikTok has announced that it will shut down the TikTok Music streaming service on November 28, which comes as the company has struggled to turn its success in marrying music and videos into a service that could take on the likes of Spotify and Google’s YouTube, reports the South China Morning Post. “After this date, access to TikTok Music, including login, subscriptions, and all other functionalities, will no longer be available,” the company said in a notice on its official website.
TikTok did not give a reason for closing its global music-streaming service, but in January it shut down Resso, its music-streaming service for the Indian market, after it was banned from app stores in the country.
Competitive pressures have also been ramping up in a market known for slim profit margins owing to high music royalty fees. Big tech firms such as Google, Apple and Amazon.com have poured resources into offering their own music-streaming services over the past decade.
Middle East firms drive record China investment
Deep-pocketed Middle Eastern investors are deploying a record amount of capital in China just as other global firms retreat, reports Bloomberg. Data compiled by Bloomberg show that the volume of deals from Middle Eastern firms into Greater China has already reached a record $9 billion this year, and there’s still three months to go. Dealmakers expect the pace to pick up in the coming quarters.
Abu Dhabi Investment Authority, known as ADIA, has been involved in an $8.3 billion deal for Dalian Wanda Group Co.’s shopping mall management unit, along with another Abu Dhabi fund, Mubadala Investment Co. Lenovo Group Ltd. in May announced a sale of $2 billion worth of zero-coupon convertible bonds to Saudi Arabia’s sovereign wealth fund as part of a broader strategic pact with the tech-hungry kingdom.
“Valuation of Chinese assets are the most attractive in the entire APAC region,” Mayooran Elalingam, head of investment banking coverage & advisory in APAC at Deutsche Bank AG. “Middle East investors are investing with a long-term time frame and taking a view that markets will normalise over time.”
Cottoning On
China has accused PVH, a clothing maker that owns the brands Calvin Klein and Tommy Hilfiger, of boycotting cotton from the country’s western Xinjiang region, and threatened to place the firm on a national security blacklist. The move, which will mean PVH have to consider both their supply chain and also how dedicated they are to China as a market, is an interesting one, considering the consistent messaging in recent months that China would like to attract more foreign firms.
The likely result of the threat, whether or not it is followed through on, is to compound the already negative sentiment we saw from recent AmCham and European Chamber business surveys. Foreign businesses in China are finding it harder to justify the risks that come as part of operating in China, with many already looking to diversify their supply chains out of the country, and this may well just speed up the process of disconnection.