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🇯🇵 SoftBank Injects US$1.1 Billion Into Battered WeWork
Japan’s SoftBank Group is reviving its US$1.1 billion financing commitment to WeWork to help the office space provider find its footing again after declining membership amid the pandemic.
While it’s all smiles and audible sighs of relief now, there were some serious doubts as to whether SoftBank would even extend such a lifeline.
Last Spring, SoftBank backtracked from the offer even after it had thrown more than US$10 billion into the company. But, now that WeWork reports that it has (almost) halved its cash burn rate from the end of 2019, the deal appears to be back on.
In a memo to employees, WeWork’s Chief Financial Officer Kimberly Ross said that the funds would help the company deal with large cash outflows in the second quarter.
Heavily impacted by COVID-19 and work-from-home regulations, WeWork’s membership fell 12% from the first quarter and it burned through a whopping US$671 million in cash. This includes the US$116 million spent on non-recurring expenses such as severance pay.
Let’s be real, the co-working company was struggling long before the pandemic with their failed IPO, reports of corporate mismanagement, and the departure of its co-founder, Adam Neumann.
Having said that, now that we have stopped obsessively baking sourdough bread and are attempting to re-enter the working world, maybe WeWork will make a smashing comeback after all.
🇨🇳 The US-China Saga Continues As Trump issues a New Ban on Huawei
In the latest episode of the US-China saga, the U.S. is turning up the heat by actually barring any company that uses equipment from five Chinese tech companies from bidding for government contracts.
Under the new regulations, all companies bidding for U.S. government contracts will need to certify that they don’t use equipment and services from Huawei, ZTE, Zhejiang Dahua Technology, Hangzhou Hikvision, and Hytera Communications. The only way to get around this is if the company has the government’s explicit say-so.
This is an expansion of a 2019 sanction that banned government agencies from buying equipment or renewing contracts with the five Chinese companies.
While analysts and amateurs alike had a field day, the 2019 sanction didn’t have much of an impact on the five Chinese companies. In fact, what about this for a plot twist: all five firms actually reported rising revenues despite the ban.
But, last Thursday’s new regulations are going to hit the companies (and their users) where it hurts.
Here’s why: all five companies are knee-deep in various contracts involving various American companies:
67,000 pieces of Huawei telecommunications gear are used by private-sector businesses in the U.S, with the manufacturing and health care sectors each using more than 14,000 of these gears.
64,000 Hikvision surveillance cameras, 3,000 Dahua devices, and 4,000 ZTE equipment are used by various companies and institutions.
How will these new regulations affect the fab five’s foothold in other regions? Well, if history is any indication, several nations are likely to follow the U.S. and distance themselves from these companies — either directly or indirectly.
Take Huawei, for instance:
The U.K. government has banned the company with instructions to its domestic network operators to rid their 5G systems of all Huawei equipment by 2027.
Rumor has it, India allegedly told two state-run telecom companies not to use Chinese telecom equipment in their network upgrades.
The French government told telecom operators that licenses for Huawei gear won’t be renewed upon expiration. No need to be coy France, we see what you’re doing there.
Get your popcorn ready for the next episode in the US-China saga. It’s going to be a juicy one considering the recent escalations involving Tik Tok, WeChat, and Huawei. Will China finally retaliate with more than thinly-veiled digs and mild counterblows?
🇨🇳 ‘Tesla of China’, NIO’s Shares Surged 13% on Monday
A Chinese rival to Tesla, NIO’s shares surged as much as 13% after the company revealed that it delivered 3,533 vehicles in July.
According to the luxury electric vehicle (EV) manufacturer, it delivered 2,610 of its ES6 (a five-seater SUV model) and 923 ES8 (a seven-seater SUV model exclusively for the China market).
That’s a very impressive 322.1% increase from the same month a year ago. As of 2020, the Chinese company has delivered 17,702 vehicles.
While these figures aren’t mindblowing in the grand scheme of (Tesla) things, automakers in China are holding onto this piece of good news after a challenging year which saw the country’s auto sales fall nearly 80%.
Here’s a quick rundown of the company for those of you who need an introduction:
Specializing in upscale battery-electric vehicles, the company is headquartered in Shanghai, China.
Founded in 2014 by William Bin Li — a car-obsessed entrepreneur who also fittingly founded the automotive content provider, Bitauto.
As with anything successful in China, Nio’s major investor includes the Chinese internet giant, Tencent.
Not content to settle with just EV, the company also offers a clothing collection (NIO Life), service centers (NIO Service) and superchargers (NIO Power).
#2AMThought: Do Chinese companies ever sell only one product?
🇮🇳 Amazon and Flipkart gear up for India’s annual online shopping spree
Step aside Black Friday and 11.11, India is preparing for its very own annual online shopping spree. Set to take place during the the Diwali period, retailers are pulling out all the stops to make sure their supply chains are ready to meet the surge in demand.
Also known as the Festival of Lights, Diwali is a special day to Hindus all around the world and will take place on November 14 this year. And boy are India’s two biggest e-commerce platforms ready to glow up during that time.
Top executives from Amazon and Walmart-backed Flipkart are boldly projecting sales to double in the consumer electronics and fashion apparel items. With their customer bases having increased between 35-40% due to you-know-what, these numbers might not seem that far-fetched after all.
However, neither is leaving things to chance. Both have actively encouraged sellers to start placing large orders for popular products.
Now, let’s talk winners and losers.
If things play out as expected, Amazon is likely to continue its Q2 achievement of beating Flipkart in online smartphone sales in India. But in any good clash of the titans story, no one goes down without an epic fight.
Shortly after losing the smartphone top spot to Amazon, Flipkart announced its foray into the alcohol delivery business. Together with Diageo-backed startup HipBar, Flipkart is looking to take a swig out of Amazon, Swiggy and Zomato’s cup. It will start with the West Bengal and Odisha states before expanding its reach across the vast country.
With a population as large as India’s, there just might be enough demand to go around. The question remains: can these giants play nice and fair to stay in the game or will the Indian government impose tighter e-commerce laws to clamp down on their reign? #PassThePopcorn
🍿 The Bite-sized Pieces 🍿
South Korea is looking to crackdown on backdoor online advertising by banning social-media influencers from promoting products/services without disclosing sponsors. Hello, #sponsoredads.
Uh-oh, Balenciaga is in hot water with Chinese customers (again!) as its “gaudy” Qixi Festival handbag campaign drew the ire of customers and was considered a tasteless insult to China. Perhaps a (stylish) cultural consultant isn’t such a bad idea, Balenciaga?
JD.com is in for a busy and exciting season ahead. The China eCommerce giant plans to open 20 e-space, 300 flagship, and 5,000 township stores by 2025. We hope your wallets are ready.
Luxshare rises as China’s iPhone manufacturer with a little help from Apple. Make no mistake: this is no display of altruism. Instead, Apple is counting on a pricing competition between Luxshare and its rivals — Foxconn and Pegatron.
The Philippines temporarily bans poultry meat from Brazil after China found traces of the coronavirus in imported frozen food. Could this just be the new dawn that Beyond Meat and Impossible Foods were hoping for?
🛍️ #Add2Cart #NotSponsored 🛍️
Perth-based Ceramics by Hannah is the OG of pun pots. What are pun pots you might ask? They are basically planters that keep your leafy friends safe and warm while providing free laughs every time you read what’s on them. Personally, I can relate to this pot. Before the pandemic, I was “normal” but now I am a self-professed crazy plant lady. Real talk: even if you don’t have green thumbs, some of these puns will grow on you.
The Crispy Crew would like to thank you for dropping by and reading all the way to end! If you enjoyed spending the last 5 minutes with us, we’d love for you to spread the word to your family, friends and co-workers too!
Tell us more about you - your thoughts on the stories we’ve covered, what you want to read next and who you think would reign supreme in India’s e-commerce war? Tell us all about it at thecrisp@substack.com, until then crunch on!