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Surge in Revenue for China’s Chip Equipment Firms as Beijing Strives for Semiconductor Self-Reliance

Avatar photo Jeah Lorraine Adams on September 28, 2023

In a resounding display of progress, China’s leading chip equipment manufacturers have witnessed a substantial surge in revenue during the first half of this year. This surge is unveiled in a recent report from Shanghai-based CINNO Research, underlining China’s unwavering commitment to achieving self-reliance in its semiconductor industry. This article delves into the details of this revenue upswing, the complexities of the chip supply chain, and the strategic maneuvers undertaken by Beijing to bolster its domestic industry.

The Remarkable Revenue Surge

Top Chinese Equipment Manufacturers Reap the Benefits

During the initial six months of the year, the top ten domestic equipment manufacturers in China achieved an impressive feat. Their combined revenue soared to approximately 16.2 billion Chinese yuan ($2.2 billion), marking a remarkable 39% increase compared to the previous year. This remarkable growth underscores the significance of China’s semiconductor industry on the global stage.

Semiconductors in the Crosshairs of a Global Tech Battle

The Broader Context of Technological Tensions

Semiconductors, the linchpin of modern technology, have become a focal point in the ongoing technological rivalry between the United States and China. As part of its strategy, Washington has employed export restrictions to curtail Beijing’s access to crucial semiconductor equipment and cutting-edge technologies.

The Intricacies of the Chip Supply Chain

A Complex Ecosystem

The chip supply chain is an intricate ecosystem, comprising various entities, from suppliers of semiconductor design tools to manufacturers of the machinery essential for chip production. China’s domestic semiconductor industry had long been reliant on foreign suppliers for these critical tools, which had placed it in the shadow of global leaders like the United States, South Korea, and Taiwan.

Beijing’s Drive for Self-Reliance

A Response to External Pressures

Since 2019, U.S. sanctions targeting Chinese technology giants like Huawei and SMIC (China’s largest chipmaker) have compelled Beijing to reinvigorate its domestic semiconductor industry. The objective: to achieve greater self-reliance and reduce dependence on foreign technology. This drive for autonomy has been a driving force behind the impressive revenue growth of China’s domestic chip equipment manufacturers.

Leaders of the Pack

Top Chinese Semiconductor Equipment Manufacturers

According to CINNO Research, Naura Technology Group Co. emerges as the leading Chinese semiconductor equipment manufacturer by revenue. The company specializes in producing tools integral to the chip manufacturing process. Notably, Naura recorded operating revenue exceeding 7 billion yuan in the first half of the year, showcasing a robust 68% year-on-year growth rate, surpassing its peers.

The second-largest player on the Chinese domestic front is Advanced Micro-Fabrication Equipment Inc. China (AMEC). AMEC manufactures machinery essential for semiconductor production, and its revenue surged by an impressive 28% year-on-year to reach 2.53 billion yuan in the first half of the year, according to CINNO’s findings.

ACM Research, specializing in cleaning and packaging equipment for semiconductors, claims the third position among Chinese players. With a staggering 47% year-on-year revenue increase in the first half of the year, ACM Research raked in 1.61 billion yuan.

Challenges on the Horizon

The Quest for Advanced Chipmaking Tools

Despite these strides, China still faces challenges in accessing the most advanced chipmaking tools available. Notably, Dutch firm ASML manufactures an essential chipmaking tool called an extreme ultraviolet lithography machine, crucial for crafting cutting-edge chips. However, Dutch government restrictions have prevented the export of these machines to China.

A Glimpse of Progress

China’s Semiconductor Industry Advancements

Notwithstanding these challenges and concerns over escalating tensions with the U.S., China’s semiconductor industry is making discernible progress toward developing more advanced chips. A recent example is Huawei’s quiet launch of a new smartphone capable of connecting to next-generation 5G mobile networks. This achievement is notable because it utilizes a chip seemingly manufactured by SMIC, showcasing a level of technological advancement that may have surprised many observers.

Takeaway

In conclusion, the surge in revenue for China’s chip equipment firms underscores the nation’s determination to achieve self-reliance in the semiconductor industry. Despite the complexities of the global chip supply chain and external challenges, China’s domestic players are making significant strides, hinting at a promising future for the country’s semiconductor sector.

Challenges Faced by Married Women in China’s Job Market

Avatar photo Jeah Lorraine Adams on September 28, 2023

Married women in China encounter significant hurdles when seeking employment opportunities, a concern that has gained attention amid the backdrop of a slowing economy and the COVID-19 pandemic. This article explores the experiences of women like Cindy Wang and Amy Su, shedding light on the discrimination they face during job searches. Additionally, it discusses the wider societal issues and the limitations in addressing these problems.

The Struggles of Cindy Wang:

Cindy Wang, a 37-year-old mother with over a decade of experience in the retail industry, found herself unexpectedly unemployed in February. She shares her experiences of facing discrimination during interviews. Hiring managers’ questions about her marital status and family life balance have become all too common, with concerns about her commitment to working overtime often arising.

Amy Su’s Journey:

Amy Su, a 35-year-old designer with an impressive work history, encountered similar challenges. Despite her qualifications, she struggled to secure a full-time position due to biases against married women over 35. Some hiring managers even expressed a preference for fresh graduates, believing they bring more creativity to the table.

Persistent Challenges in the Job Market:

Wang and Su’s stories reflect broader challenges that married women face in today’s job market. These difficulties have been exacerbated by the economic slowdown and the pandemic. The issue has gained substantial attention in China, with social media platforms abuzz with discussions on discrimination against married women.

Data and Surveys:

Recent surveys, such as one by Zhaopin, indicate that questions related to marriage and plans for children are common during job interviews for women. Age discrimination is another significant concern. While China has moved away from its one-child policy, questions about childbearing have become routine during interviews.

Legal Framework vs. Reality:

Despite legal protections against gender and pregnancy-related discrimination, the reality on the ground often falls short. Some companies still resist hiring women, fearing maternity leave, while others create hostile work environments that force pregnant employees to resign. Enforcement mechanisms for these laws remain minimal, allowing such practices to persist.

Limited Support and Legal Constraints:

Cindy Wang’s experience with her former employer highlights the difficulties women face when seeking legal recourse. Her attempts to settle the dispute through labor arbitration ultimately ended in her favor, highlighting the challenges in pursuing justice in such cases.

Exploring Alternative Paths:

In response to the job market’s challenges, some women like Cindy Wang have turned to alternative career paths, such as live streaming. While these endeavors offer flexibility, they also come with uncertainties, such as commission-based income.

Considering Entrepreneurship:

Amy Su, on the other hand, contemplates starting her own business as a way to navigate the limitations of the job market. Many women in similar situations find themselves having to compromise their career aspirations due to societal biases.

The Bigger Picture:

The article touches on the wider societal context and the limitations of addressing discrimination against women in the workplace in China. It underscores the challenges in voicing grievances and the perceived secondary importance of women’s rights in the country’s political landscape.

Takeaway:

As married women in China continue to face discrimination in their job searches, the prospects for their careers remain uncertain. The lack of clear solutions and the broader societal and political issues add to their pessimism. The article concludes by highlighting the uncertainties surrounding their professional futures and the urgent need for change.

Tesla price war leads to Chinese EV makers losing profits

Avatar photo Jeah Lorraine Adams on April 24, 2023

Tesla — On Thursday, Tesla received some good news as shares in the company’s Chinese rivals dropped.

Xpeng declined by 8% in Hong Kong, while Nio also fell by 5.6%.

Two others, Li Auto and Leapmotor, also dropped by 4.2% and by 2.4%, respectively.

Additionally, BYD, the world’s largest plug-in hybrid EVs and battery EVs seller, also witnessed a 1% plunge in Hong Kong.

Meanwhile, its Shenzhen-listed stock reported a bigger loss of 2.3%.

Catalyst

The drop in shares came after Tesla CEO Elon Musk revealed the company would continue cutting prices.

The decision is meant to boost demand for electric cars as the market grows increasingly competitive.

During an earnings call with analysts on Wednesday, Musk released a statement, saying:

“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin.”

“We do believe… that it’s better to ship a large number of cars at a lower margin, and subsequently, harvest that margin in the future as we perfect autonomy.

Price cuts

In October, Tesla started cutting prices in China, which is home to the world’s largest EV market.

The price cut decision came after losing market share to competitors like the Warren Buffet-backed BYD.

Another price cut came in January 2023 for Tesla’s China-made Model 3 and Model Y.

The slashed prices extended across markets worldwide to bolster demand while challenges from other EV makers increased.

For example, the United States witnessed Tesla reducing its prices for the sixth time in 2023 ahead of its first-quarter earnings.

Impact

According to data from the China Passenger Car Association, sales of Tesla’s China-made cars increased by 10% from the same period in January compared to 2022.

Meanwhile, most of the Chinese rivals posted steep declines in sales.

Leapmotor and Xpeng’s January sales took a massive hit, plunging by 86% and 60%, respectively.

Furthermore, Tesla’s decision to slash prices prompted a price war in China.

After Elon Musk’s company made the first move, several Chinese car manufacturers followed a similar path.

Companies started cutting their prices or offered discounts, including:

  • Xpeng
  • Leapmotor
  • BYD
  • Huawei’s EV unit

In February, a Huawei EV salesperson spoke with state-owned Economic Observer, saying:

“Tesla has cut prices a lot. If we don’t cut prices, we really can’t survive.”

According to recent data from the CCPA, Tesla’s sales of China-made vehicles went up by 35% in March, leading to more than 88,000 units.

However, it still fell behind BYD, as the company sold more than 100,000 pure battery EVs.

Read also: Debt limit plan proposed by Kevin McCarthy in Wall Street

The price wars

Tesla’s decision to cut prices created a domino effect that led to a price war and an impact on the company’s sales and profits.

So far in April, the company earned $2.9 billion, which, excluding special items, is down by 22% from 2022.

The lower prices also prompted revenue to a drop of $1.3 billion compared to the fourth quarter, even with record deliveries.

As a result, the company is faced with tighter profit margins.

Other companies like Ford have also cut prices, especially for its key EV, the Mustang Mach-E.

Over the call with investors, CEO Elon Musk said the company is facing headwinds from broader economic conditions.

“It is worth pointing out that the current macro environment remains uncertain,” said Musk.

“I think people already know [that], especially with large purchases such as cars.”

Europe

On Thursday, shares of European car makers also took a hit as people grew concerned about pricing pressure.

French company Renault dropped by 6.5% despite the company reporting strong sales and higher prices over the first quarter.

Stellantis, the group that came from a merger between Fiat Chrysler and PSA Group dropped by 4.8%.

Mercedes-Benz Group and BMW fell around 2.8%.

Meanwhile, Volkswagen, Europe’s most successful car maker, took a hit of 1.9%.

China is spending billions to bail out loans

Avatar photo Alice Blake on April 6, 2023

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China – In the past decade, China lent massive amounts of cash to governments across Asia, Africa, and Europe.

The loans are believed to be a power play to help the country grow its global influence by helping with infrastructure megaprojects to become one of the globe’s most prominent creditors.

A new report says Beijing became a major emergency lender to the aforementioned countries, most of whom are struggling to repay their debts.

The loans

China spent $240 billion between 2008 and 2021 to bail out 22 countries that are debits in Xi Jinping’s signature Belt and Road infrastructure project.

According to a study from the World Bank, Harvard Kennedy School, Kiel Institute for the World Economy, and AidData, among the countries under Beijing’s debt are Argentina, Kenya, and Pakistan, to name a few.

China’s bailouts are still miniscule compared to the United States or the International Monetary Fund (IMF), making it a prominent name for developing countries.

Meanwhile, the IMF regularly sends emergency loans to countries that are going through a crisis.

Similarities

China’s rise to power as international crisis manager parallels the United States’ strategy for almost a century.

The US offered bailouts for high-debt countries, including Latin America during the 1980 debt crisis.

“We see historical parallels to the era when the US started its rise as a global financial power, especially in the 1930s and after World War 2,” the report said.

However, there are also some differences.

For example, China’s loans are secretive – its operations and transactions are withheld from public view.

The report noted that the loans reflect the current financial system becoming less institutionalized and transparent and becoming more piecemeal.

Additionally, the Chinese central bank didn’t disclose data on loans or currency swap agreements with other foreign central banks.

China’s state-owned banks and companies don’t publish details about their loans to other countries.

Read also: Silicon Valley Bank had red flags, but no one noticed

Instead, the research team relied on annual reports and financial statements from countries linked to Chinese banks, news reports, press releases, and other documents.

Brad Parks, a co-author of the study, said:

“Much more research is needed to measure the impacts of China’s rescue loans – in particular, the large swap lines administered by the PBOC (People’s Bank of China).

“Beijing has created a new global system for cross-border rescue lending, but it has done so in an opaque and uncoordinated way.”

The loans

According to the report, less than 5% of China’s overseas lending portfolio helped countries with debt problems in 2010.

Last year, the figures soared to 60%, which showed Beijing ramping up rescue operations and steering away from the infrastructure that characterized its Belt and Road campaign in the early 2010s.

Furthermore, most of the loans were made in the last half decade of the study, between 2016 and 2021.

$170 billion of the $240 billion in total bailout loans came from the PBOC’s swap line network, indicating agreements between central banks and exchange currencies.

The remaining $70 billion was lent by Chinese state-owned banks and enterprises, such as oil and gas companies.

The report said that most countries involved in China’s swap lines were deep in financial crisis, with problems escalating because of the Covid-19 pandemic.

For example, Argentina defaulted twice (2014 and 2020) after struggling with its national debt for decades.

Pakistan also saw its currency drop following the shaky foreign exchange reserves’ status.

In 2021, Sri Lanka borrowed from China, a little ways before its political and economical crisis last year.

Due to the rationing of goods like fuel and medicine, protests erupted.

Despite its charitable offers, China’s bailouts come at a price.

The report says that PBOC requires an interest rate of 5%, which is higher than IMF rescue loans’ 2%.

Additionally, most loans are extended to middle-income countries, which are more important to China’s banking sector.

Meanwhile, low-income countries that generate little to no money are instead offered debt restructuring.

“Beijing is ultimately trying to rescue its own banks,” said study co-author Carmen Reinhart.

“That’s why it has gotten into the risky business of international bailout lending.”

China adamant it will not sell TikTok and its algorithm

Avatar photo Scarlet Logan on March 27, 2023

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China – The state of TikTok had reached a stalemate after its CEO testified before Congress, who were skeptical about his intention with US user data.

His appearance on Thursday led to lawmakers grilling him about the company’s attempts to protect user data and put out fire regarding its ties to China.

Meanwhile, China has remained adamant that it would oppose a forced sale of TikTok – its first direct response to the Biden administration’s demands.

They had previously requested TikTok’s Chinese owners to sell their share of the company; otherwise, they would get banned in its most important market.

China’s comments follow Shou Chew, the CEO of TikTok, appearing before the court amid increasing scrutiny over the company’s connections in Beijing.

The news

On Thursday, China’s commerce ministry stated that the forced sale of TikTok would be detrimental, damaging global investors’ confidence, especially in the United States.

“If the news [about a forced sale] is true, China will firmly oppose it,” said Shu Jueting, a ministry spokeswoman.

She also said a potential deal would have to seek the approval of the Chinese government.

“The sale or divestiture of TikTok involves technology export, and administrative licensing procedures must be performed in accordance with the Chinese laws and regulations,” Shu continued.

“The Chinese government will make a decision in accordance with the law.”

China previously didn’t weigh in directly on a possible force sale.

However, since 2020, it indicated that it wanted to protect Chinese technology by implementing recommendation algorithms to a list of restricted technologies for export.

Hearing

The Thursday hearing with Shou Chew lasted more than five hours.

It started with a lawmaker’s urge to ban the app, and they stayed combative throughout the hearing.

“Your platform should be banned,” said Washington Republican Rep. Cathy McMorris Rodgers, whose words started the hearing.

Read also: Apple thieves target passcodes before snatching iPhones

Chew’s testimony emphasized TikTok’s independence from China, highlighting its ties to the United States.

“TikTok itself is not available in mainland China,” he said in his opening remarks.

“We’re headquartered in Los Angeles and Singapore, and we have 7,000 employees in the US today.”

“Still we have heard important concerns about the potential for unwanted foreign access to US data and potential manipulation of the TikTok US ecosystem.”

“Our approach has never been to dismiss or trivialize any of those concerns. We have addressed them with real action.”

While it is true that TikTok operates out of China, the Chinese government still has significant leverage over businesses under its jurisdiction.

There is speculation that ByteDance and TikTok could be forced to cooperate with a series of security activities, possibly including TikTok data transference.

During the Thursday hearing, Chew attempted to provide nuanced answers and assuage concerns about the company and ByteDance.

However, he was frequently interrupted as lawmakers called him evasive.

After the hearing

Following more than five hours of testimony, lawmakers expressed skepticism about TikTok’s attempts to protect user data and ease concerns about its ties to China.

According to analysts, there would likely be more calls by Washington seeking to ban TikTok if the company doesn’t separate itself from its Chinese parent.

Last December, Chinese officials proposed tightening measures to govern the sale of content-based recommendation algorithms to prospective foreign buyers.

The algorithm is a powerful tool that keeps users glued to the app.

It is also speculated to be responsible for TikTok’s success.

The algorithms recommend users new videos based on their behavior, usually pushing videos they like.

Chinese regulators initially added algorithms to the list of restricted technologies in August 2020.

Back then, the Trump administration threatened the company that it would be banned unless it was sold.

According to analysts and experts, Beijing might prefer that TikTok exit the US market instead of giving up its algorithm.

Baidu stocks improve after ERNIE Bot demo

Avatar photo Scarlet Logan on March 20, 2023

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Baidu – Chinese search giant Baidu received a massive share bump after it revealed its answer to the ChatGPT trend: ERNIE Bot.

On Friday in Hong Kong, the stock surged 14.3%, making it the top company in the Hang Seng Index.

In addition, the company gained 3.8% in New York during US trading hours on Thursday.

What happened?

A day earlier, Baidu was the most prominent loser in the Hang Seng Index.

A public demonstration of the company’s bot left investors unimpressed, leading Hong Kong shares to drop 6.4%.

However, CEO Robin Li revealed during the presentation that more than 650 companies had joined the ERNIE ecosystem since February.

The reversal follows the company’s announcement of more than 30,000 businesses signing up to try the chatbot service two hours after the demonstration.

Esme Pau, the head of China and Hong Kong internet and digital assets for Macquarie, said:

“The high degree of enterprise interest is positive, and we expect Baidu to continue to capture China’s enterprise demand for generative AI.”

According to Pau, the company’s shares bounced back on Friday following positive feedback from users and analysts.

The reviews suggested the bot was highly advanced.

Stock drop

During the company’s presentation, Baidu showed its chatbot’s capabilities, like generating a company newsletter, creating a corporate slogan, and solving a math riddle.

According to Esme Pau, the company’s stocks dropped on Thursday due to the demo being pre-recorded.

Because it wasn’t live, investors were skeptical of the authenticity of the ERNIE Bot.

Furthermore, Pai pointed out Baidu’s demo came days after GPT-4 was launched, raising the bar for ERNIE.

Read also: Apple thieves target passcodes before snatching iPhones

GPT-4

OpenAI launched GPT-4 as the latest update to its artificial intelligence technology, receiving wide acclaim from users.

Many were stunned by early tests and a company demo showcasing its ability to do the following:

  • Draft lawsuits
  • Pass standardized exams
  • Build a working website from hand-drawn sketches

On Tuesday, OpenAI introduced GPT-4 to change how the internet is used for work, play, and creating content.

The latest update is trained on online data to create unique responses to user prompts.

The update allows users to perform the following with ease:

  • Analyze beyond texts
  • Made coding easier
  • Pass tests
  • Provide more accurate responses
  • Streamline work across various industries

Despite its advancement, OpenAI said GPT-4 still has similar limitations to previous versions.

For example, the technology is limited to its data set, which cuts off in September 2021.

ERNIE

Esme Pau said Baidu’s shares were modestly down before its showcase on Thursday, indicating pressure from investors with high expectations after the GPT-4 launch.

“ERNIE also does not have the [same] multilingual capability as GPT-4, and has yet to improve for English queries,” said Pau.

“Also, the ERNIE launch did not provide sufficient quantifiable metrics compared to the GPT-4 launch earlier this week.”

ERNIE is similar to ChatGPT in that the technology is based on a language model trained on a massive amount of online data to create unique responses to user prompts.

Robin Li said Baidu expects ERNIE to be close to ChatGPT or GPT-4.

However, he acknowledged the software has yet to be perfected, noting that it was launched to enterprise users first.

Baidu’s latest service isn’t available to the public yet.

Competition

Baidu announced its chatbot development in February.

At the time, critics said the service would only add to the current US-China rivalry regarding technology and innovation.

However, Li shook off the comparison over the launch, saying:

“The bot is not a tool for the confrontation between China and the United States in science and technology, but a product of generations of Baidu technicians chasing the dream of changing the world with technology.”

“It is a brand new platform for us to serve hundreds of millions of users and empower thousands of industries.”

According to Baidu, the company’s service stands out due to its advanced grasp of Chinese queries and ability to create different kinds of responses.

“ERNIE Bot can produce text, images, audio, and even video given a text prompt,” the company said in its statement.

“And [it] is even capable of delivering voice in several dialects, such as the Sichuan dialect.”

However, Baidu is not alone in the development of similar technology in China.

In February, Alibaba announced plans to launch a ChatGPT-style tool.

According to analysts, Baidu has the best advantage in the space in China so far.

“Our view is ERNIE is six months ahead of its potential contenders,” said Esme Pau.

On Friday, Baidu announced a milestone in its transportation business, becoming the first Beijing operator to provide fully driverless ride-hailing services.

Despite its innovation, the company isn’t allowed to charge passengers in the capital yet.

It was previously required to have a driver in the front passenger seat to assume control in emergencies.

 

Tesla announce US and UK discounts on selected vehicles

Avatar photo Jerry Cooper on January 19, 2023

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Tesla: Every industry has been impacted by the economic crisis, which has forced difficult decisions from major brands.

Tesla is moving in a different route than other companies, which have been laying off employees to decrease expenses.

The developer of electric vehicles is reducing prices in the US and Europe instead.

The news

Tesla is an enterprise that designs and develops electric automobiles, devices for energy storage and solar equipment.

Elon Musk established the company in 2003.

Tesla electric cars are recognized for their efficiency, broad mileage, and striking looks.

Among the most popular Tesla models are the Model S, Model 3, Model X, and Model Y.

Along with building commercial vehicles, Tesla also supplies other automakers with electric powertrain parts and systems.

On the company page, a promotion was uploaded on Thursday.

Sales

On the market, Teslas have been selling out quickly.

The company’s earnings have been increasing over the last few years, with massive positive growth.

By 2020, the number of Tesla cars sold worldwide surpassed 5 million.

Since 2018, the Model 3 has dominated the global market for electric vehicles.

The cheapest EV model today is the Model 3.

Additionally, China and Europe have had phenomenal sales for Tesla.

The company hopes to boost production and sales in several countries in the near future.

Tesla has typically performed well in terms of sales, confirming its position as the market leader for electric vehicles.

However, decreasing US expenses may make it simpler for the company to be granted large federal EV tax credits, which would increase domestic and international sales.

The following European nations are presently offering discounts on the Model 3 and Model Y:

  • Austria
  • France
  • Germany
  • The Netherlands
  • Norway
  • Switzerland
  • The UK

Read also: Nike leaning towards Gen Z China consumers after Covid restrictions are lifted

The models

Tesla in Germany apparently decreased the cost of the Model 3 and Model Y by somewhere between 1% to over 17%, according to the vehicle’s configuration.

In December 2022, the Model Y lost ground to the Model 3 in popularity in Germany.

The American EV powerhouse outperformed Volkswagen and its well-known EV, the ID.4, in Germany.

The Volkswagen ID.3 is an entry-level electric car, comparable to the Model 3 at the discounted price.

An independent EV industry analyst named TroyTeslike claims that the price of a brand-new Tesla Model 3 has fallen by 6% to 14% in the US.

The price of the Model Y varied depending on configuration, down to around 19%.

The Model 3 is Tesla’s entry-level sedan, whereas the Model Y is the company’s sport utility vehicle or crossover.

In the US, the more expensive Model S sedan and the Model X SUV are now more inexpensively available.

Tax credits

Depending on its form factor, category, efficiency, driving range, and manufacturer’s recommended retail price, electric cars could qualify for tax benefits in the US.

The US government delayed the implementation of new rules limiting the acquisition of raw materials and battery components until March to  give manufacturers the opportunity to be eligible for a $7,500 clean vehicle tax credit.

As a consequence, EV producers may once again acquire the parts and supplies they need from overseas vendors and still qualify for government financial incentives.

Individuals who qualify for government subsidies are exempt from the requirement for final EV automotive assembly under the existing interim regulations.

Discounts

The recent tax cut will give EV producers tax incentives in the short and long term.

Customers who committed to spending additional money to purchase new Tesla vehicles before the end of 2022 have had issues with this.

Tesla angered many Chinese consumers by lowering the prices of the Model 3 and Model Y after committing to accept deliveries at higher pricing until the end of 2022.

Numerous customers allegedly protested and asked for refunds, according to Reuters.

Tesla, meanwhile, is unyielding.

In an effort to entice customers to take delivery of their vehicles before the end of the fourth quarter, the firm last month announced a $7,500 discount on the Model 3 and Model Y.

If US customers agreed, the manufacturers would also provide free Supercharging for 10,000 miles at their charging stations.

Operations

The business reported that 439,701 automobiles were produced and 405,278 were delivered in the fourth quarter, even after the rebates.

Although analysts had predicted a 50% annual rise in auto deliveries, neither they nor the yearly goals were achieved in the fourth quarter.

Tesla is now operating its first US assembly factory in Fremont, California.

It also has a new plant in Austin, Texas, a production facility abroad in Shanghai, and a brand-new facility in Gruenheide, Germany.

Reference:

Tesla cuts prices in the US and Europe to stoke sales after lackluster year-end deliveries

Nike leaning towards Gen Z China consumers after Covid restrictions are lifted

Avatar photo Scarlet Logan on January 16, 2023

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Nike: Gen Z, also known as the “digital natives,” are the youngest consumers in the market, born between 1997 and 2012.

They are the first generation to grow up with technology as a fundamental part of their daily lives, dramatically influencing consumer behavior.

Gen Z has a strong sense of individuality and values authenticity and transparency, and they are known for their savvy when it comes to technology, social media, and e-commerce.

They are also more diverse and socially conscious than previous generations.

As a result, businesses and marketers have had to adapt their strategies to better appeal to this demographic.

John Donahoe, the CEO of Nike, recently said that the company is focusing on Gen Z consumers, particularly in China.

Nike & Gen Z

Nike, one of the world’s leading sportswear brands, has had to adapt its strategies to appeal to Gen Z consumers.

As a demographic, Gen Z is known for its strong sense of individuality and values authenticity and transparency.

They also have a keen interest in sustainability and social responsibility, leading many to prioritize purchasing from socially responsible companies.

Appealing to a generation

To appeal to Gen Z consumers, Nike has focused on building sustainable and transparent supply chains and has actively promoted social issues such as diversity and inclusion.

The company has also focused on creating customizable products that allow consumers to express their individuality.

One example is the Nike By You program, which allows customers to design their own sneakers using a wide range of colors and materials.

Social media use

In addition, Nike has also been investing in digital marketing and e-commerce to reach Gen Z consumers, who are known for their tech-savvy and heavy use of social media.

The company has also been active on social media platforms such as Instagram and

TikTok is where it has been able to connect with Gen Z consumers and showcase its products and brand message.

Overall, Nike has successfully appealed to Gen Z consumers by prioritizing sustainability, inclusivity, and personalization in its products and marketing.

And by having a robust online presence and leveraging digital marketing, the company has effectively reached and connected with this demographic.

Read also: CPI set to influence the Fed’s 2023 plans for inflation

China consumers

On Thursday, John Donahoe described how the athletic apparel retailer continues to experience strong demand in China amid Covid disruptions.

“We’re still the number one cool and favorite brand in Shanghai and in Beijing,” said Donahoe.

“We’re really focused on the Gen Z consumer in China, we saw a very good response from the Gen Z consumer who wants the most innovative products and wants brands that are globally relevant.”

“We saw good response in Q2, and we have the same focus and outlook going forward.”

Revenue

China’s “zero Covid policy” was still up when Nike’s fiscal second quarter concluded on November 30.

1,500 Nike stores across the country were shut down, causing a 3% sales drop.

The company’s revenue in China was down by 22% in the same quarter period in 2021 when Covid disruptions were more stable.

While John Donahoe didn’t address how spending ramped up since the country lifted its zero Covid policy, he asserted that the company is confident China is still a strong market.

“We factored in some disruption in our outlook, but we view that as transitory, we still believe in the fundamentals of China,” he said.

“We invested in building hyperlocal products where we take an iconic franchise like Air Force One, or Dunk, and we localize it so it’s relevant for the Chinese consumer – and the Chinese consumer really responded to that.”

Inventory

For the past few quarters, Nike has struggled with inventory, but Donahoe assured people that the problem was happening in North America.

In addition, he said the company is working on hitting levels normalized in May.

“The consumer is still paying list price for the Nike products that they know and love,” said Donahoe.

“In the areas where we have excess inventory, which is primarily in North America, we are working through it. We’re discounting and working through it.”

Nike has been moving away from wholesalers to try a direct-to-consumer strategy.

However, during the recent fiscal quarter, whole revenue jumped 19% due to the company’s inventory availability to sell to partners.

Although the company invested in its new strategy, Donahoe said wholesalers are still crucial to Nike.

“Consumers in this day and age want to get what they want, when they want it, how they want it, and in our industry, they’ve been very clear they want a premium and consistent shopping experience regardless of channel,” said Donahoe.

Reference:Set featured image

Nike CEO touts strength in Gen Z China shopper as Covid disruptions dent regional sales

Apple and Tesla stocks drop in 4th quarter

Avatar photo Alice Blake on January 5, 2023

…

Apple: Apple and Tesla are two of the biggest tech entities in the United States, but they are currently dealing with problems with their stocks.

The two companies face significant headwinds in China, which concerns investors.

Apple’s shares fell more than 3% when concerns about the iPhone lineup in the December quarter grew louder.

Meanwhile, Tesla fell by 12% on Tuesday when the company reported that deliveries were below analyst expectations.

China’s influence

The two tech giants’ stock decline can be attributed to challenges occurring in China.

The country accounts for 17% of Apple’s sales and 23% of Tesla’s revenue, which makes it a significant market for the two firms.

Daniel Ives, the senior equity analyst at Wedbush Securities, addressed the companies’ woes, saying:

“China is the heart and lungs of both demand and supply for both Apple and Tesla.”

“The biggest worry for the Street is that the China economy and consumer are reining in spending, and this is an ominous sign.”

He continued:

“In 2022, the worry was supply chain issues and zero Covid-related issues, 2023 is the demand worry and this has cast a major overhang on both Apple and Tesla, which heavily relied on the Chinese consumer.”

iPhone factory problems

Investors are keeping an eye on Apple’s fiscal first-quarter results, which will likely be released later this month and cover the December holiday period.

In October, the largest iPhone factory in Zhengzhou, China, suffered a Covid outbreak.

Foxconn, which runs the factory, set restrictions.

By November, workers protested over a pay dispute, and many employees walked out.

Foxconn attempted to entice them back with bonuses.

Since then, things have settled down.

Reuters reported that the factory was almost back at full operations on Tuesday.

The situation highlighted Apple’s dependence on China for iPhone production.

Following the Covid restriction, the tech giants announced that the factory was operating at a significantly reduced capacity.

Read also: Retailers have Grim Expectations with the 2023 Market

Fears

Evercore ISI analysts estimate Apple’s December quarter endured a $5 to $8 billion revenue shortfall.

However, Refinitiv consensus estimates the company could report a 1% annual revenue decline in the December quarter.

As a result, investors who expected a strong showing for the iPhone 14 have grown worried.

However, Apple faces more than just supply chain issues.

China recently overturned its zero-Covid policy in an effort to reopen its economy.

However, there have been Covid-19 outbreaks in large parts of the country, which could influence the demand for iPhones.

IDC research manager Will Wong addressed the issue, saying:

“The key challenge is expected to be on the demand side, especially since resilient high-end consumers may have started to shift their spending to travel while some may have shifted their focus to medical supplies.”

“The shift in spending will pose a key challenge in the short term.”

Tesla delivery

The Tesla share price drop occurred due to a miss in vehicle deliveries.

405,278 cars delivered in the fourth quarter fell below the expectation of 427,000 deliveries.

Demand in China and the supply chain played a role in the decline.

Throughout 2022, Tesla’s Shanghai Gigafactory endured Covid disruptions.

However, analysts also pointed out concern over Chinese consumer demand.

“Tesla will point to supply disruptions and lockdowns as the main problem in China in 2022,” said Bill Russo, the CEO of Shanghai-based Automobility.

“While these are real headwinds, it cannot hide the fact that demand has softened for a variety of reasons, and their order backlog is 70% smaller than it was prior to the Shanghai lockdown.”

Shanghai underwent lockdowns in late March 2022 as the government attempted to control a Covid outbreak.

Read also: Apply For Car Title Loan Using Your Vehicle

Headwinds

Investors have grown concerned that Tesla would decide to cut prices to entice buyers, pressuring margins.

In October, Tesla slashed Model 3 and Model Y prices in China, going back on the prices it made earlier in 2022.

However, another hurdle Tesla faces in China is rising competition from domestic rivals, including Nio and Li Auto.

In addition, there are lower-priced competitors which will launch new models this year.

“Tesla’s models have been in the market for a while and are not as fresh to the Chinese consumer as other alternatives,” offered Russo.

“What we are learning is, EV product life cycles are short as they are shopped for their technology features.”

“Buying an older EV is like buying last year’s smartphone,” he continued.”

“They need new or refreshed models to reignite the market. Just pricing lower can damage their brand in the long run.”

Reference:

China risks loom over US tech giants Tesla and Apple as share prices plunge

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