Diplomacy 101: From cognac to cars

Insight: Chinese President Xi Jinping landed in France on Sunday for his first trip to Europe in five years. Top of the agenda was a China-France-EU trilateral meeting with French President Emmanuel Macron and European Commission President Ursula von der Leyen. Some headway was made on key issues, with Xi calling for a ceasefire in Ukraine during the Paris Summer Olympics. He also agreed to lift provisional tariffs on French cognac exports, which were proposed earlier this year when the EU launched its anti-subsidy probe into Chinese EVs.

Impact: Chinese exports of EVs into Europe remain a sticky topic, though France seems to be having some success securing Chinese investment while protecting its own technologies and interests. The French government gave the thumbs up to Chinese EV giant BYD opening plants in France – a sign of goodwill and a move towards a more integrated global EV supply chain. In tandem, it also signed a ‘strategic sector contract’ with French business groups to achieve a fourfold increase in the sale of all-electric vehicles to 800,000 a year by 2027. Could homegrown French brands become formidable competitors to China’s EV giants? The race is on. 

5 trillion

The highest operating profits in JPY ever recorded by a listed Japanese company, which to nobody’s surprise is Toyota. The automaker this week announced that its FY2023 operating profits nearly doubled to JPY 5.3 trillion (about USD 34.5 billion), boosted by a weak yen but also strong sales of hybrid models. And it is ploughing JPY 2 trillion (USD 13 billion) of that back into strengthening its supply chain and AI capabilities as well as in future EV and hydrogen-fuelled cars.

Insight: A Japanese startup is betting AI can help deliver vast quantities of translated manga to hungry international fans. Orange, an AI-assisted translation company, says the JPY 2.92 billion (USD 19 million) investment it recently received will help kickstart its ambitious plans to churn out 50,000 new English titles in five years – apparently three times the amount of all translated manga currently in existence.  

Impact: Rather than just asking ChatGPT to do it, Orange says its proprietary AI will use sophisticated image and character recognition tools to comprehend and translate notoriously difficult-to-localize wordplay and other manga hallmarks. 

Meanwhile, the company recognizes human intervention will still be crucial to producing quality material, employing professional localizers to check the robots’ work. This is an important lesson for all wordsmiths, including communications professionals. And if all goes well, Orange may not only succeed in bringing manga to the global mainstream, but also provide a positive case study in how humans can work in harmony with our AI overlords!

Insight: Currency traders did not get much of a break during Japan’s Golden Week as the yen dropped past 160/USD during holiday-thinned trading – its weakest level for 34 years. This has prompted two suspected interventions by the Bank of Japan yet, despite a bounce to nearer the 150/USD level, Japan’s currency remains the poorest performer among major nations.  

Impact: Yen weakness is mostly dollar strength and derives from the sizeable gap between their interest rates, with the U.S. at 5.25% and Japan only just above zero. But foreign exchange markets are notoriously unpredictable and there are indications the two currencies could reverse in the second half of 2024. As the U.S. economy, and especially its labour market, loses some momentum, inflation should ease, allowing Wall Street to price more interest rate cuts back in. In Japan, meanwhile, inflation is firmly embedded at around 2%, so the BOJ will have to raise rates again – perhaps as early as July. This should spur corporates to review their FX outlook and their hedging policies.

Caixin investigates the intensely competitive food delivery industry in Hong Kong and beyond.

Insight: KeeTa, Chinese internet giant Meituan’s food delivery service spinoff, has become the largest food delivery service provider in Hong Kong despite debuting only a year ago. KeeTa captured 44% of market share by order amount in March, surpassing Singapore’s Foodpanda and the UK’s Deliveroo, both longstanding delivery platforms in the local market. With almost a third of the city’s population registered users, and a 30% monthly growth rate of new retailers, Meituan is flying high – although it lags behind Foodpanda in Gross Merchandizing Value (GMV). 

Impact: KeeTa has replicated many of Meituan’s strategies from mainland China, offering discounted prices, free delivery and punctuality guarantees. In contrast, Foodpanda argues its business is based on ‘long-term and sustainable growth’ instead of ‘short-term promotional strategies’. Meituan now hopes to expand into other overseas markets including Saudi Arabia. But can it export its successful Chinese model to a wildly different food culture that is already home to established global players like Uber, or is it just too tall an order to handle? 

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