• Could Shein be shifting to London?
• What could a London listing deliver for Shein?
• And what obstacles standin the way of Shein finding a new home on the London Stock Exchange?

Shein, a world leading fast-fashion brand, could be making plans to relocate its initial public offering (IPO) to London from New York. But scrutiny over its supply chain and links to China could make this a challenging move.

Founded in Nanjing, China in 2008, Shein is now headquartered in Singapore, though it continues to list in the US. The company officially became the world’s largest fashion retailer in 2022, with a valuation of $80 to $90 billion being sought in late 2023 ($10 billion less than its value in 2022, a reduction mainly down to a sector-wide decline in venture funding).

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Will Shein leap and go for an IPO in the US?

Shein of London?

Shein is known for its vast range of affordable, trendy clothing, accessories, and other fashion items, primarily working via its online platform. With its extensive selection of products and a high turnover, the e-commerce company is able to keep up with the rapid nature of altering fashion trends. Its low prices and continuous, constant introduction of new staples has gained a substantial following, particularly among younger consumers.

IPO change of location

Currently, Shein’s IPO is based in New York, but reports suggest it is in early talks to switch to London. This relocation is reportedly influenced by the suspicion that the US Securities and Exchange Commission is unlikely to grant approval for Shein’s IPO. Other possible IPO locations allegedly being discussed include Singapore and Hong Kong.

The US remains the retailer’s preferred location, but it is still working on its application to list in the country. If Shein decides to switch to another country, it will have to file a new listing application overseas with Chinese regulators.

A listing in London could present a much-needed boost to the IPO market after a torturous period over the last year. Valued at $90 billion, Shein could potentially raise $9 billion if 10% of its shares go public, just slightly behind the $9.1 billion IPO Porsche enjoyed in 2021.

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Given the challenging IPO market conditions and the comparatively lower fundraising in the UK through IPOs in 2023 (approximately $1 billion, the lowest in decades), a potential London listing could introduce renewed capital and attention to the beleaguered market, attracting investor interest and helping revitalize the IPO landscape.

This move goes against the current trend of firms upping sticks and moving from the UK to pastures new in the wake of Britain’s severing of ties with continental European markets. For instance, TUI AG shareholders voted to delist from the London Stock Exchange (LSE) and move its trading to Germany. Arm Holdings Plc moved its IPO to New York from London in 2023, deepening the UK’s struggle to stop the mass business exodus. The UK government tried to intervene by lobbying for a domestic listing, but its attempts failed.

Experts believe that Shein’s discussions to list on the LSE is a short-term compromise. It’s about choosing certainty over valuation and liquidity in the immediate term. While this move could be a substantial one, especially in the realm of IPO, it’s unlikely other Chinese firms will follow suit and list in the UK, as the London market is much smaller compared to other major financial hubs, like the US and China.

Shein faces challenges

Why would Shein benefit from the LSE?

In 2023, Shein filed, albeit confidentially, to go public, but it faces various challenges to do so in the US. There is scrutiny and certain concerns surrounding Shein’s supply chain, with US lawmakers lobbying to delay the company’s public offering until it is proven that there is no forced labor in its supply chain.

Shein has faced allegations that it uses forced labor to help produce its $5 t-shirts and $10 sweaters, but the retail giant has repeatedly denied such reports, stating that it does not manufacture in Xinjiang, a region where allegations of human rights violations have been raised. Government officials and advocates have accused China of using Muslim minority groups and Uyghurs to work under poor conditions, but Beijing has (naturally) denied any abuses.

The main regulatory hurdle faced by Shein will be convincing regulators and governments that its supply chain is clean. Congresswoman and Democratic Representative Jennifer Wexton said that Shein must “prove to American consumers that its products are not sourced from forced labor.” In 2023, Wexton also led a bipartisan call for the SEC to stop Shein’s IPO, until it can verify no forced labor is used in its supply chain.

There have also been calls for the SEC to audit Shein by another group of Republican attorneys general from 16 US states.

A spokesperson for Shein said the company has a “zero-tolerance policy for forced labor” and was “eager to engage and continue to be transparent with all stakeholders, including Representative Wexton and her staff.”

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Shein vs Temu: an ecommerce explainer

Intellectual Property (IP) issues, as well as the forced labor allegations, will undoubtedly make it difficult for Shein to achieve its public status, even if the company provides additional disclosures about its operations. Tie in the growing US-China trade tension and worries of Shein’s possible connections to the Chinese Communist Party, and the company faces more questions about how much control Chinese regulators have over it.

Shein’s potential move to the LSE from New York is ultimately a response to geopolitical tensions and regulatory scrutiny in the US. By listing in London, Shein may benefit from a perceived tax loophole, as well as geopolitical shifts.

With Jeremy Hunt, the British Chancellor, reportedly encouraging this move by having discussions with Donald Tang, Shein’s chairman, we could see the relocation this year, though Shein has some serious questions to answer before this becomes a viable prospect.

The post London calling: Shein could be moving its IPO across the pond but faces challenges appeared first on TechHQ.

• The Chinese economy has until recently been growing exponentially.
• Bullish behavior from the US has had a negative effect on the Chinese economy.
• It will probably take a lot more to upset the country’s growth long-term.

It’s no secret that China’s recent economic performance is a far cry from its persistent high growth patterns over the last three decades. In those thirty or so years, China’s economy transformed into an upper-middle-income status from one that was low-income. Just a quick glance at market exchange rates shows a GDP of $18.3 trillion in 2022. This was 73% of the United States’ GDP, with China’s per capita income now approximately $13,000. This equates to around 17% of the United States’ per capita income. When we consider China’s was less than two percent of the US’ 34 years ago, the country’s economic growth has been remarkable.

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What goes up tends to come back down, though, and economists have long forecasted an economic collapse for China due to various fragilities. For instance, the country’s growth has been powered by investments in physical capital, particularly real estate. This, in turn, has been financed by a banking system that lacks certain efficiencies. Now, it seems those forecasters were correct, as China struggles with rising debt levels, crashing stocks, weaker consumer confidence, a diminishing labor force, and an unraveling property market.

Despite the country’s economic struggles, China still sits at the top of the pile in terms of being the world’s leading manufacturing force, according to Eurizon strategists. Compared to its rivals, China’s manufacturing capacity is far greater. Coupled with the fact that export prices have risen by 30% and 31% in Mexico and Vietnam respectively over the last three years, two of China’s most prominent competitors, it seems China will continue to reign supreme as the world’s most dominant manufacturer.

China’s labor force far outweighs the combined economies of the US, Japan, Canada, the EU, India, Korea, Vietnam, and Mexico, estimated to be around 212 million. This backs up a point made by Eurizon strategists, Stephen Jen and Joana Freire. “We believe the fact that export prices have risen more rapidly than general inflation – a remarkable fact in a period of a strengthening dollar – indicates stresses and pressures on the manufacturing capacity in these countries, including shortages of appropriate workers, infrastructure, and transport.”

Yes, other countries may start to gradually shift away from China in global manufacturing, but it is unlikely smaller nations will have the power and abilities to adapt to rapid changes to be on par with China’s dominance. Jen and Freire agree that there is little evidence of deglobalization, stating, “no other country has the manufacturing capacity to supplant China.” Even countries that are exporting more to the US in place of China, such as Mexico, are importing more than ever from – you guessed it – China.

Economic growth prospects

Predicting China’s growth is a challenging task, with only a crystal ball offering any glimpse of accuracy right now. Nevertheless, productivity may be the engine to power future economic success. Although the country has faced struggles, and continues to do so, its total factor productivity (growth not attributed to increased inputs) has averaged a respectable 3% growth over the last few decades.

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However, productivity growth has dropped to about one percent a year over the last decade. If this trend continues, China may face further economic challenges. This is why China must improve its productivity growth, as relying solely on increased inputs, like capital and labor, may not be sufficient for long-term economic success.

The Chinese government has recognized the need for improvements in productivity, moving away from low-skill manufacturing. The government’s answer is a “dual circulation” growth policy, one that enhances worldwide finance and trade, relying more on domestic demand, homegrown innovations, and being technologically self-sufficient.

This policy faces some difficulties though, as China can only upgrade its industries by relying on foreign technology. The issues lie in geopolitical and economic conflicts with the West and the US. Therefore, access to such technologies and export markets may become strained and limited. Add to this the government’s clampdown on private companies in areas like education, health, and technology, and it’s clear that entrepreneurship in the country is also facing tight constraints and negative impacts.

Sectors, including electric vehicles, green energy, technology platforms, and electronics continue to be bright beacons of hope in a tumultuous Chinese economy, with slight recoveries after substantial drops in July and August 2023.

The Chinese economy – surging or stalling?

We mustn’t forget that China remains the world’s second-largest economy, still a center for manufacturing and supply chains, global exports, and home to some of the biggest brands, like TikTok, Tencent, and Alibaba. So, maybe all this worry is a bit far-fetched?

Not if we look at Japan.

The Japanese example

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30 years ago, Japan was leading the way with technological innovations and leadership. But, even with this, the country faced significant economic turmoil, mass debt, and institutional weaknesses; all of which undermined the country’s prosperity and growth. Being a technological powerhouse did not prevent Japan from facing difficult decades; there is little reason why the same should not apply to China.

To help stabilize the country’s economy, 2024 is expected to bring tax cuts and fee reductions for businesses, with additional support for the struggling housing market.

Right now, there do not seem to be any stringent measures planned to improve consumer demand or boost household incomes. Instead, the government is working to strengthen public opinion and economic propaganda. The goal? To promote a more positive view of the Chinese economy, even if it is beleaguered.

The key interest area of focus is between China and the United States. In November, Chinese President Xi Jinping met with Joe Biden, with both hoping to stabilize their external diplomatic relationship. Xi also met with EU Commission officials in an attempt to maintain a close relationship for access to technology and trade. This doesn’t rule out an upcoming trade war between China and the EU, though; instead, it’s Xi trying to smooth out his country’s economy.

China’s industrial policy is centered around access to foreign technology, the widespread use of large-scale industrial funds, and state subsidies. Previously, this has led to an oversupply of production capacity, particularly in sectors like renewables and steel. This is now evident in China’s battery and electric vehicle production.

The auto industry in China has been operating at less than 60 percent of its total production capacity. In addition, approximately 12% of its current production of 27 million units have been exported, with the production of electric vehicles notably increasing. Excess capacity in sensitive areas, like renewables and steel, can lead to economic inefficiencies and trade tensions are ever present. But having access to foreign technology could be a key solution to accelerating China’s innovations and technological advancements, potentially positioning China as a continuing leader in various sectors and technologies.

When compared to the US, the EU has significantly lower tariff rates, offering more opportunities for Chinese exports of vehicles. However, an anti-subsidy investigation has been initiated by the EU, which may lead to tariffs and restrictions on Chinese electric car imports. With the U.S. also taking measures to boost the manufacturing capabilities in renewables, electric vehicles, and semiconductors, China may have to face some tough stances, particularly in trade policies, as 2024 progresses; even more so if Trump gets reelected.

For now, China remains the world’s largest exporter, boasting an estimated global market share of 15%. This marks an all-time high when the Chinese economy is facing one of its lowest points in recent history.

The post Chinese economy likely to remain strong long-term? appeared first on TechHQ.

• Gaming in China to escape industry-killing restrictions?
• Rules on gaming in China have been removed from  the website where their terms were listed.
• But were they actually draconian – or a prescription for mental health among the gaming community?

In recent years, China gaming crackdowns have been fodder for us-and-them discourse, the idea of a regulating body deciding how long young people could game being almost as heinous (more, to some) than the one-child policy that ended in 2016.

Back in 2021, China’s video game regulator said online gamers under the age of 18 would only be allowed to play for one hour on Fridays, weekends, and holidays. Let’s face it, sometimes threatening a kid with legal action feels like the only way they’ll listen to you – especially when you tell them to turn off their devices.

In China, gaming was branded “spiritual opium” by media outlets, as rising concerns about the impact of excessive gaming on young people meant the government stepped in. As recently as December of last year, draft legislation was publicized that would limit the amount people could spend on video games.

Sure, gaming crackdowns hurt the young people they restrict, but have we considered the monetary loss to gamemakers? Please, God, won’t somebody think of the gamemakers?!

If online games stopped offering rewards for excessive play time and in-game spending, including those for daily logins, as the industry regulator stipulated, people would play less and – no, surely not! – spend less on gaming.

“The removal of these incentives is likely to reduce daily active users and in-app revenue and could eventually force publishers to fundamentally overhaul their game design and monetization strategies,” said Ivan Su, an analyst at Morningstar.

The biggest global gaming market is China, so any changes are high stakes.

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But after a U-turn from China, gaming companies can breathe again. The National Press and Publication Administration (NPPA) has removed the December drafts from its site. The apparent change in opinion has seen share prices of Chinese gaming firms jump.

Shares in Tencent Holdings, the world’s biggest gaming company, and its closest rival NetEase, rose as much as 6% and 7% in morning trading respectively. In December, nearly $80bn was wiped from their values, so there’s definitely ground to recover.

All the same, there’s still uncertainty about the future of China’s gaming industry. Su said he thinks ambivalence around gaming will “probably last for quite some time, unless we get a very drastic turnaround in government rhetoric, or unless we get some super supportive policies.”

The link to the proposed legislation now opens an error page – possibly the first time in history users have been glad to see one.

The removal of the potential rules from the NPPA website was described by analysts as unusual. However, the consultation period on the rules ended on Monday, the day before their disappearance, suggesting a revision is in store.

After the market turmoil the initial proposal caused, the NPPA took a more conciliatory tone, and Feng Shixin was removed from his position as head of the publishing unit of the Communist Party’s Publicity Department, which oversees the NPPA.

The two most contentious articles of the China gaming crackdown were articles 17 and 18. Article 17 seeks to ban videogames from forcing players into combat, which is the key mechanic of the majority of contemporary multiplayer games.

Article 18 would require games to set a spending limit for players and bar features incentivizing in-game spending. Su “expects the government to remove Article 17 (prohibition of mandatory player-versus-player) and 18 (imposing spending limit) from the final rule,” he told Reuters.

It might not be a popular opinion, but maybe limiting the features of gaming that the Chinese restriction have done could be a good thing…

In the same way that Meta has faced lawsuits for knowingly enabling addictive features in its social media, perhaps it’s time to reconsider what “spiritual opium” we allow kids access to.

Okay, we aren’t sure the opium thing will stick, but the idea of reducing the money spent on virtual rewards and combat-focused gameplay doesn’t seem that outrageous if you separate it from the fact that it’s the Chinese government that was insisting on it, and look at lawsuits that are still live in the US.

Watch this gaming space.

Are the new restrictions now defunct?

The post Gaming in China is so back, baby appeared first on TechHQ.

• Europe has supply chain problems – and China has traditionally held the key to them.
• A new process could solve those supply chain issues, though – through fertilizer.
• The processing of rare earths could tackle supply chain shortfalls, assuming a deal can be done.

Europe’s supply chain weaknesses are an understood phenomenon. But according to Dr Arne Petter Ratvik, a metals expert at SINTEF (an independent Norwegian research organization), fertilizer might well be the answer to those problems. Dr. Ratvik notes that raw materials required by energy, auto, electronics, computer, and other industries can be extracted from standard fertilizer production.

At the core of these findings are rare earths, raw materials found in the Earth’s crust. These are already being used in industrial magnets for their powerful and efficient magnetic properties. From smartphones to tablets and microwaves to refrigerators, rare earths are key components that play crucial roles in batteries, circuits and screens, to name just a few.

Currently, most rare earth reserves are located in China. In fact, according to the European Commission, China processes the entire global supply of rare earths essential for permanent magnets. Countries with the largest rare earth reserves are:

1. China
2. Vietnam
3. Brazil
4. Russia
5. India
6. Australia
7. USA
8. Greenland
9. Canada
10. South Africa

Europe may not be a big player in the rare earths reserve market, but recent findings could change that. In January 2023, LKAB, a state-owned mining company in Sweden, reportedly discovered Europe’s largest deposit of rare earth metals. The find in Kiruna, Lapland means that Europe may need to rely less on imported raw materials.

A European supply chain priority?

Safeguarding Europe’s access to raw materials has become a key priority on the EU political schedule, as geopolitical and strategic concerns highlight Europe’s supply chain vulnerabilities. This has led to various EU funded research projects, such as Dr. Ratvik’s. The aim of this particular project, named SecREEts, was to increase Europe’s supplies of rare earths through the extraction of these materials during the manufacturing process of fertilizer.

The SecREEts project operated for a span of four and half years, finishing in November 2022. According to Dr. Ratvik, “rare earths from fertilizers could produce very good magnets,’ which can help ease the burden on Europe’s supply chain.

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In March 2023, the European Commission suggested establishing targets across the European Union, specifying a minimum of 10% for extraction, 15% recycling, and 40% for the processing of critical raw materials, such as rare earths, within Europe.

The SecREET’s project focused on threeout of the 17 metallic elements that make up rare earths. It is these elements that contain properties that allow for technological advances in various industries. The three rare earths studied were neodymium, dysprosium, and praseodymium, each one critical for the EU to transition to green-energy consumption. These rare earths are already being used in the development of permanent magnets in wind turbines and electric cars.

The extraction method developed by Dr. Ratvik and his team could meet approximately five to 10% of Europe’s requirements for these three rare earths. Dr. Ratvik said, “We developed an integrated extraction process within the fertilizer production process to take out the rare earth elements.” Currently, rare earths in phosphate rocks, which constitute 0.3% to 1%, are not utilized for additional value during the production of fertilizer. The process involves phosphate rocks being dissolved in acid, followed by precipitation to filter out unwanted elements.

In order to achieve the new-found fertilizer method, the SecREET’s researchers added another precipitation step. This enabled rare earths to be extracted from the production stream of the fertilizer. From there, the rare earths were processed further and used by magnet producers in the UK and Germany. According to Dr. Ratvik, the resulting magnets were powerful and high-performing.

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Dream team: GIS and supply chain management

There are still obstacles to overcome. Both Russia and Ukraine supply large quantities of phosphate rocks for fertilizer manufacturing, but the current conflict could stand in the way of the SecREETs extraction technique being used on a global scale. The answer to Europe’s supply chain woes could be in Asia, however, as researchers are exploring a possible partnership between the EU and that region.

Dr Jewellord Nem Singh, a critical mineral and industrial policy expert, is currently discussing this matter with various industries and governments in South Korea and Japan. Dr Nem Singh is leading another EU-funded research project known as GRIP-ARM, looking at ways to ensure future access to critical raw materials, while mitigating the socio-environmental impacts associated with extraction.

Handling China

Rare earths – can they solve Europe’s supply chain issues?

China is undoubtedly a leader in the world of rare earths, currently controlling a large percentage of the world’s reserves. China is also dominant in processing rare earths from elsewhere around the world, with extended supply chains for medical devices and solar panels, to name a few. Other countries play key roles in China’s dominance, however, providing technologically advanced examples of various products. One example is Japan’s highly powerful permanent magnets.

China is considered a competitor as well as a key ally with the EU. That’s why GRIP-ARM is working to find a balanced relationship, and determine whether Europe can effectively eliminate China from essential segments of the supply chain associated with core technologies.

If a partnership can be agreed upon between Asia and the EU, Dr. Ratvik’s recent discovery could be a turning point for supply chains worldwide, let alone throughout Europe.

There’s better’n gold in them thar piles of rare earth.

The post Could rare earths be the answer to reducing Europe’s supply chain problems? appeared first on TechHQ.

• Huawei has submitted a formal notice announcing the termination of its lobbying efforts at the Capitol.
• The move signals a more substantial attempt from China to decouple from the US.
• The Chinese telecommunications giant allocated more than $13 million for lobbying efforts in the past decade.

More than a decade ago, Huawei Technologies, based in China, embarked on an extensive and costly mission to establish a stronghold in the North American market. In the early phases of this endeavor, the Chinese telecommunications giant significantly increased its lobbying expenditure in Washington, prompted by the US government’s investigation into potential Chinese espionage risks and threats to America’s telecommunications infrastructure posed by Huawei’s presence.

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However, despite facing scrutiny since 2012, Huawei has vehemently and consistently denied all allegations, particularly those related to its supposed ties with the Chinese military. Washington has remained skeptical, considering Huawei’s global dominance as the world’s largest telecom equipment supplier and the second-largest mobile phone manufacturer. With its technology spanning the globe and a substantial budget dedicated to research and development, Huawei has emerged as a frontrunner in 5G technology.

The concerns escalated as Washington began questioning Huawei’s potential involvement in espionage, given its widespread deployment in numerous cell towers and network infrastructure throughout the US. Despite Huawei’s claims that its products posed no threat, by 2022, US regulators had taken stringent measures, prohibiting the company from selling its products in the US and imposing restrictions on its access to advanced technology.

Huawei continued its lobbying in the US as it still had ambitious plans for market expansion. The company had always planned to establish a stronger foothold in the American telecommunications landscape. But it became apparent that navigating the complex regulatory environment and addressing concerns related to national security were paramount.

Unsurprisingly, Huawei’s lobbying efforts faced formidable challenges, particularly as the company became a focal point in the US-China trade tensions. On top of espionage, allegations of cybersecurity threats and growing skepticism from policymakers posed significant hurdles. 

In due course, Huawei became ensnared in a complex network of restrictions, notably being added to the Entity List by the US Department of Commerce. Despite challenges, Huawei adopted a multi-faceted approach to counter the negative narrative. The company invested heavily in building relationships with lawmakers, government agencies, and industry influencers. After all, Huawei has aimed to dispel concerns about its ties to the Chinese government and present itself as a responsible and transparent player in the global technology landscape. 

Huawei also launched extensive public relations campaigns to improve its image. These campaigns highlighted the company’s contributions to technological innovation, job creation, and efforts to bridge the digital divide.

Eventually, the company initiated a gradual reduction in its lobbying endeavors, culminating in a complete cessation, as reported by Bloomberg last week.

How much did Huawei spend on lobbying in the US?

It was Huawei itself that officially notified the termination of its lobbying activities at the Capitol. The company has also discontinued its operations at the Plano, Texas offices, as confirmed by Trey Smith, the executive vice president at CBRE, a real estate services firm managing leases for the building, in an email to Bloomberg.

At its peak, Huawei boasted a squad of nine lobbying firms and a cadre of public relations representatives working in its service. Top-level executives frequently orchestrated briefings with congressional offices and prominent news outlets. Federal filings reveal that the company allocated over US$13 million to lobbying efforts in the last decade alone.

The Chinese wireless equipment maker spent tens of millions of dollars trying to win over US policymakers. Source: Bloomberg.

For context, in just one quarter of 2019, Huawei’s spending on federal lobbying skyrocketed to US$1.8 million, marking a six-fold surge from the previous year. The company’s total lobbying expenditure in the US for 2021 amounted to US$3.6 million, per official filings. Some of these funds were allocated to extravagant events attended by prominent figures, including seasoned Democratic lobbyist Tony Podesta, who reportedly earned US$1 million from Huawei that year. 

Podesta officially concluded his work for Huawei on December 30, 2022, according to disclosures with the US Senate. “The US market isn’t a likely place for a breakthrough for Huawei in the near future,” Chris Pereira, a former Huawei public relations executive and founder of the consultancy iMpact, told Bloomberg.

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With a solid ban in effect and minimal business presence in the US, Huawei has little incentive to continue depleting funds on lobbying efforts in Washington. So much so that the company’s final two registered lobbyists, Jeff Hogg and Donald Morrissey, departed in recent months. 

Morrissey, who lobbied for Huawei and Futurewei, confirmed via LinkedIn that he departed the company in December. He now holds the position of senior director of government affairs at the battery technology company Gotion. Hogg, Huawei’s head of government relations since 2020, left the company in November, per his LinkedIn profile. Requests for comment from Hogg went unanswered.

“The lobbyists’ recent departures follow an exodus of staff from Huawei’s US operations and mark a quiet end to the company’s costly, years-long effort to maintain a presence in the North American market. The firm reached its peak by supplying small mobile firms across the US even as major carriers shunned it. Rising tensions with Beijing eventually all but banned it,” the report by Bloomberg reads.

With Huawei ending its lobbying gam, what’s next in the US-China tussle?

As Huawei bows out of Washington, it marks the end of a chapter in its American aspirations. Yet the company is far from bereft of alternatives. Responding to the US ban, China’s government has decried unfair practices, while Huawei pivots to cultivate its domestic market and spearhead technological advancements. For now, how Huawei fills the void left by the US market remains uncertain. 

The upside is that Huawei is anticipated to shine brightly in the smartphone industry in 2024, and the China-based telco giant is poised for a substantial surge in global shipments, marking a projected double-digit growth. A report from research firm TechInsights recently suggested that the company might emerge as a significant surprise in the overseas market. Will Huawei dominate its native China after teh Mate Pro 60, and grow from there as a symbol of an alternative way for tech firms to expand?

Watch this space.

The post Huawei ends DC lobbying: What’s next for US-China relations? appeared first on TechHQ.

• McDonald’s China has entereed into a new tech partnership.
• RFID tags will help the company speed its stocktaking process – and close any loopholes.
• McDonald’s China plans a further collaboration – this time with Huawei.

McDonald’s China has paired up with Cainiao to use RFID chips to improve supply chain efficiency. The use of radio frequency identification (RFID) was found during trials to reduce the time it took for staff to do a stocktake from one hour to 15 minutes.

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A third-generation identification technology, coming after barcodes and QR codes, RFID has been widely adopted in supply chain tracking. With a built-in microchip, data from the product is transmitted through radio frequency signals.

The trial further showed that RFID technology improved the accuracy of inventory data by 30%. Deploying the tech will improve inventory and logistics efficiency, alongside which McDonald’s and Cainiao will explore digitization and automation for the supply chain.

So who is McDonald’s China partnering with?

Cainiao is the logistics business owned by Alibaba Group Holdings. Established in 2013, it’s the logistical backbone of the Alibaba empire and handled more than four million cross-border parcels daily in 2023.

Amid increased competition across its businesses, Alibaba sought to free up decision-making by restructuring the group; in March, Cainiao was ‘spun off.’ As part of this, it submitted its A1 filing to Hong Kong’s stock exchange last September.

Cainiao aims to raise at least US$1 billion according to sources cited in the South China Morning Post from September. The deal with McDonald’s (which will no doubt help achieve that goal) comes as Cainiao prepares an initial public offering (IPO) in Hong Kong.

McDonald’s isn’t doing the company a small favor, though: Cainiao moved into the RFID field in 2021 with the launch of its own tags which it said could achieve 99.9% accuracy. Just two years later, in April 2023, the company announced it had produced and sold over 100 million RFID tags.

What’s the deal?

Under the deal, McDonald’s China will deploy RFID tech on its supply chain with built-in tags on food packages, allowing the company to track products from factories to restaurants. The extra cash will certainly help Cainiao’s standing as it prepares for its Hong Kong IPO, and the move comes as McDonald’s ramps up its digitization efforts in China.

Besides the knee-jerk negativity about two huge corporations forming an alliance to generate and hoard more wealth, the deal represents two companies that don’t seem to have any issues with breaking humanitarian practices formulating a way to ensure not one chicken nugget goes unaccounted for.

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Further, the decision from McDonald’s China to strengthen its links to the country by using chips produced domestically will doubtless have repercussions for the US-China chip war.

McDonald’s China has a network of over 5,500 restaurants and over 200,000 employees serve more than one billion customers annually. China is McDonald’s second-largest market globally – no points for guessing who comes in at number one.

Last month, the fast food chain also said it would work with Huawei to build a native app based on the next iteration of HarmonyOS, the Chinese giant’s self-developed mobile platform.

In November of 2023, McDonald’s acquired investment firm Carlyle’s minority stake in the company, leaving the remaining 52% to be held by CITIC Capital. Shockingly, the huge company that pulls in billions across the world isn’t picky about who or where its money comes from – and it certainly won’t take sides in a silly chip war.

The post Fast food unaffected by US-China chip war appeared first on TechHQ.

• Firms from China, like Alibaba and ByteDance, have suggested that they’re not interested in the downgraded AI chips by Nvidia.
• The H20 chip, the most powerful among three China-focused chips by Nvidia, is set for mass production in Q2 this year.
• Offloading the chips may prove troublesome if Chinese firms are not interested.

In a narrative woven through with technological intrigue, reports from foreign media unveil Nvidia Corp’s plans to initiate mass production in the second quarter of 2024 for an AI chip meticulously tailored for the Chinese market in adherence to the latest US export regulations. Initially slated for a grand debut last November, the chip’s entrance into the spotlight in China faced delays attributed to integration challenges encountered by server manufacturers. 

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Simultaneously, whispers from certain foreign media outlets suggest a reluctance among Chinese customers to embrace the “downgraded” iterations of these chips, sparking a fiery debate echoing across both Chinese and US territories. Despite differing perspectives, a shared understanding has emerged that this abnormal state of affairs is inherently unsustainable.

Day by day, the plot thickens in this delicate dance between technological prowess and geopolitical maneuvering, leaving the stage open for an unpredictable interplay of innovation and regulation.

What has Nvidia been doing for China?

In adherence to the latest US regulations governing chip exports, Nvidia has consistently introduced specialized AI chips and graphics cards explicitly tailored for the Chinese market. It all started with the A800 and H800, introduced as alternatives for Chinese customers in November 2022, about a month after the US first restricted exports of advanced microchips and equipment to China.

The table provides specifications for Nvidia’s latest GPUs—H20, L20, and L2—covering FLOPS, NVLink bandwidth, power consumption, memory bandwidth, capacity, die size, and more. Source: SemiAnalysis.

Unfortunately, a year into the October 2022 export control, the US further tightened its restrictions, which led to the barring of the shipments of advanced A800 and H800 AI chips to China. In response to the October 2023 renewed restrictions, Nvidia planned three other chips to comply with new US export rules – the H20, L20, and L2. 

In November last year, citing two sources familiar with the matter, Reuters reported that Nvidia has communicated to its clientele that the speculated H20 GPU, crafted to navigate through the export control measures imposed by the Biden administration on China, is anticipated to be unavailable until February or March this year.

The H20, L20, and L2 include most of Nvidia’s newest features for AI work. Still, some. Still, some of their computing power measures were cut back to comply with new US rules, according to SemiAnalysis’ analysis of the chips’ specifications. But the question remains: does China even want the downgraded version of Nvidia’s AI chips?

China would instead source a domestic alternative

For a start, according to sources cited by The Wall Street Journal (WSJ), since November 2023, major cloud service providers (CSP) in China, such as Alibaba and Tencent, have been testing samples of Nvidia’s special chips. These Chinese enterprises have conveyed to Nvidia that the quantity of chips they plan to order in 2024 will be significantly lower than their initial plans.

The new challenge is that significant Chinese CSPs are not interested in buying these chips’ lower-performing versions. A report by TrendForce indicated that Chinese enterprises have been testing the highest-performance version, H20, of Nvidia’s “special edition” AI chips. 

“Some testers have mentioned that this chip enables efficient data transfer among multiple processors, making it a better choice than domestic alternatives for building chip clusters required for processing AI computational workloads,” the report reads. Nevertheless, testers highlight the necessity for additional H20 chips to offset the performance difference compared to earlier Nvidia chips, leading to increased expense.

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According to the report by the WSJ, the advantage in the performance of Nvidia’s “downgraded” chips over domestic Chinese alternatives is diminishing in the short term, making locally manufactured chips more appealing to buyers. The report indicates that influential entities such as Alibaba and Tencent are shifting some advanced semiconductor orders to domestic companies, leaning towards domestically developed chips. 

This shift in sourcing behavior is also noticeable among the other major chip buyers, including Baidu and ByteDance. According to TrendForce data, around 80% of the high-end AI chips Chinese cloud computing companies use are sourced from Nvidia. But this proportion may decrease between 50% to 60% in the next five years.

Has Nvidia badly midjudged its approach in China? Source: X.com

In the long term, TrendForce believes Chinese customers will begin to express uncertainty about Nvidia’s ability to consistently supply chips due to the potential tightening of chip export controls by US regulatory authorities. Focusing on independent AI chip development, Chinese CSPs like Baidu and Alibaba will actively invest in autonomous AI chip initiatives. 

Baidu introduced its first self-developed ASIC AI chip, Kunlunxin, in early 2020, with plans for the second generation in 2021 and the third in 2024. After acquiring Zhongtian Micro Systems and establishing T-Head Semiconductor, Alibaba began creating its ASIC AI chips, including the Hanguang 800. 

TrendForce reports that while T-Head initially collaborated with external companies for ASIC chip design, post-2023, Alibaba is anticipated to increasingly rely on internal resources to strengthen the independent design capabilities of its next-gen ASIC chips, particularly for Alibaba Cloud’s AI infrastructure.

The post China is resisting the downgraded AI chips from Nvidia. What’s next? appeared first on TechHQ.

• Confidentially filing for an IPO, Shein aims to capitalize on potential investor receptivity despite recent lackluster market debuts. 
• Shein is also gauging its resilience as a China-founded e-commerce giant amid anticipated heightened political scrutiny.
• That scrutiny is likely only to increase in 2024 as the Presidential election draws near.

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The US government has its eyes on Shein and Temu now, and here’s why

Shein, the ultrafast fashion giant, is actively pursuing an initial public offering (IPO) in the US to secure its position as a global retail powerhouse. However, the journey to the public market is riddled with challenges as the fast fashion giant faces intense scrutiny from various quarters, including investors, politicians, and regulators.

Shein’s journey so far has been remarkable–from China to its current headquarters in Singapore. The mass market online clothing retailer was founded by Chinese entrepreneur Chris Xu. Within a decade of its inception, the company achieved a valuation of US$100 billion during an April 2022 fundraising round, a valuation higher than Zara’s owner Inditex and H&M combined.

By 2022, Shein was the world’s third most valuable startup. Fast forward to this week, when the fast fashion giant was reported to have confidentially filed to go public in the US, one of its largest markets.

Shein faces the formidable task of convincingly assuring skeptical investors, politicians, and regulators that the controversies surrounding the company do not pose an impediment to its growth.

Although, as of May this year, the company experienced a valuation dip to slightly over US$60 billion, should it proceed with its IPO, Shein is still anticipated to emerge as the most valuable China-founded company to go public in the US. So far, only Didi Global, the Uber of China, has come close when it delivered one of the year’s biggest IPOs in 2021, at a US$68 billion valuation.

Still, Shein’s move to discreetly file for an IPO in the market from which it receives the most scrutiny is being seen as an audacious move. It signifies the company’s ambition for financial expansion and is viewed as a strategic move to gauge investor sentiment. Despite a series of underwhelming market debuts in recent months, Shein and its underwriters are banking on a receptive market, showcasing confidence in the brand’s resilience and growth potential.

One of the major hurdles on Shein’s path to IPO success is navigating the heightened political scrutiny surrounding China-founded companies. With geopolitical tensions, concerns over human rights issues, and trade controversies, Shein is under intense examination. 

Around the world, the company has faced scrutiny for purported issues, including reported subpar working conditions in factories, alleged copyright infringement concerning independent artists’ designs, and criticism of the environmental impact associated with fast fashion. Shein, however, has consistently refuted these accusations.

Workers make clothes at a garment factory that supplies Shein. (Photo by Jade Gao / AFP)

In the US specifically, Shein is steadfast despite the ongoing scrutiny it receives on account of being Chinese-founded, no matter what it does to get on the good side of US lawmakers. Most recently, Shein and its rival Temu were accused of “building empires” by a US House committee in a report on cpmanies exploiting legislative loopholes to evade US import taxes and sanctions checks.

Other concerns raised by critics center around the possibility that Shein might engage contract manufacturers located in China’s Xinjiang region, where advocates and governments have made allegations of the internment of Uighurs and other predominantly Muslim minority groups. Beijing, however, denies any such abuses.

Shein and its lobbying effort for its US IPO

Persuading regulators of the integrity of its supply chain is expected to be a significant regulatory hurdle for Shein as it seeks approval from the US Securities and Exchange Commission (SEC) for its IPO launch. Earlier this year, a bipartisan effort led by a congresswoman urged the SEC to postpone Shein’s IPO until the company’s supply chain could be verified free from forced labor. 

Additionally, a coalition of Republican attorneys general from 16 US states has called for an SEC audit of Shein. The company has faced scrutiny from two separate Congressional committees for its sourcing practices and utilization of a trade loophole that allows most of its products to enter the US duty-free.

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In its latest social impact report, Shein emphasized its collaboration with Oritain, a firm employed by the US government to examine cotton connections to China’s Xinjiang region. As previously disclosed to Reuters, Shein conducts tests on samples from every third-party cotton mill it collaborates with. Between June 1, 2022, and July 11, 2023, the company conducted 2,111 tests.

A worker makes clothes at a garment factory that supplies Shein. (Photo by Jade Gao / AFP)

Nevertheless, critics argue that the testing procedures fail to adequately scrutinize the millions of garments Shein exports worldwide every year.

A separate Reuters report noted that public records reveal Shein allocated US$1.28 million for Capitol Hill lobbying this year in anticipation of its public debut – though it could be argued that figure is relatively small change both for a company of Shein’s size and for an influence-market as addled by pork-fat as Washington.

The company also engaged in private meetings with lawmakers, including prominent critics, aiming to reshape its image in Washington, as per insights from Congressional aides.

Can Shein’s bid for IPO status succeed in the US right now?

In addressing concerns about its supply chain, Shein representatives underscored the company’s commitment to diversifying its sourcing from China to include other nations, most notably India. They also highlighted efforts to increase the import of Chinese goods to the US via conventional container shipping, acknowledging the payment of tariffs on these items.

“Shein is fundamentally a Chinese company; investors should approach Chinese offerings with extreme caution. Its attempt to go public should prompt a closer look at its business practices, especially its links to slave labor and its evasion of US customs laws,” Republican Sen. Marco Rubio told Reuters. “I will closely monitor Shein’s disclosures in the lead-up to its IPO,” added Rubio, who criticized the retailer’s lobbying efforts in a letter distributed to other senators in June.

The Wall Street Journal, the first to break the news on Shein’s IPO, said that Goldman Sachs, JPMorgan Chase, and Morgan Stanley have been hired as lead underwriters on the offering, which could happen in 2024.

How will Beijing treat Shein’s US IPO?

Clothes are displayed on hangers at a Chinese fashion brand Shein pop-up store in Paris on May 4, 2023. The Shein pop-up store is set to open for business from May 5 to 8. (Photo by Christophe ARCHAMBAULT / AFP)

Since a broad crackdown on overseas listings, fewer Chinese IPOs have been in the US. As part of Shein’s ongoing efforts to prepare for its inaugural share sale in the US, the company strategically positions itself as a global entity despite its Chinese origins.

It started in 2022 when Shein relocated its headquarters to Singapore and initiated the expansion of manufacturing facilities beyond its Chinese base. 

The e-commerce giant eventually established distribution centers in the US, Canada, and Europe to enhance shipping efficiency in these regions. Notably, the company acquired the British online brand Missguided in October and secured a stake in the fashion retailer Forever 21 in August.

There remains the possibility that Chinese regulators will subject Shein’s listing to scrutiny and mandate the company to seek approval. After all, Chinese securities regulations require companies to register for the sale of shares abroad, subjecting them to screening for state security and other potential concerns.

Such regulatory processes could introduce further delays to Shein’s IPO proceedings.

Shein files – but can it get over the hurdles?

The post Will Shein leap and go for an IPO in the US? appeared first on TechHQ.

• The newly released Xiaomi Mi 14 series might help turn around a moribund smartphone market in China.
• Xiaomi and Huawei have seen impressive results in China during Q3.
• Xiaomi is the first smartphone on the market to use Qualcomm’s new Snapdragon 8 Gen 3 chipset.

Since the resurgence of Huawei following the launch of its Mate 60 series in late August, the smartphone market in China has taken an exciting turn. Local players have been recording better numbers, albeit at a slower rate. Xiaomi, which launched its Mi 14 series in October, has also been selling its latest smartphones like hotcakes, signaling the end of a prolonged downturn in the smartphone market in China. 

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Like Huawei’s 5G-enabled Mate 60 series, Xiaomi has undeniably struck gold with the Xiaomi 14 and Xiaomi 14 Pro, especially within the Chinese market, where consumers seem genuinely excited, swiftly making their purchases. Xiaomi has acknowledged the success on its Weibo page. According to its report, the Snapdragon 8 Gen 3 flagship sales soared six times higher within the first 5 minutes compared to the launch of the Xiaomi 13 a year ago. The demand was so overwhelming that some servers experienced initial disruptions due to the sheer rush of buyers.

Built upon Xiaomi 14, Xiaomi 14 Pro comes with enhanced technologies and innovative experience. Photo: Xiaomi

To recap, the smartphone market in China, the world’s largest, has been experiencing an extended period of decline. The industry, struggling alongside a sputtering economy, has seen shipments shrinking every quarter since the start of 2022, with even local brands like Huawei, Xiaomi, Honor, Oppo, and others recording severe drops in sales. 

But numbers from the recently concluded third quarter suggest that the smartphone market in China may be nearing a bottoming-out phase. Internation Data Corporation (IDC) anticipates a positive year-on-year (YoY) sales growth in China for the final quarter of this year, signaling a noteworthy reversal after ten consecutive quarters of decline.

As IDC’s analyst Guo Tianxiang wrote recently, “The market could bounce back in the fourth quarter when Apple and its rivals typically release their latest devices.” His assessment seems correct. For a start, the smartphone market in China has been showing signs of a revival on the back of brisk demand for Huawei Technologies’ new 5G smartphone and Apple’s recently launched iPhone 15 series.

A significant 15% year-on-year (YoY) growth in smartphone sales was achieved during the “golden week” holiday, from September 29 to October 6, celebrating China’s National Day, according to a research note last month by TF International Securities analyst Kuo Ming-chi. “The slump in the Chinese smartphone market will be over soon, with expectations of renewed growth,” Kuo wrote. 

Echoing Tianxiang, Kuo indicated that handset shipments in China will see growth resume in the fourth quarter of this year. For context, in the first six weeks of the Mate 60 Pro release, Huawei sold 1.6 million units, Counterpoint Research said. Meanwhile, Honor, a brand also once prominent in the market, has regained the top position in the recent third quarter, securing an 18.3% market share, according to Counterpoint. 

People look at mobile phones in Huawei’s flagship store in Shanghai on September 25, 2023, after queuing up for hours hoping to be able to buy the tech giant’s latest Mate 60 Pro mobile phone. (Photo by REBECCA BAILEY / AFP)

Honor also achieved a 3% YoY sales growth, and its ascent is attributed to the successful launches of the Honor 90 and Honor X50 models. Additionally, Honor’s foldable models, particularly the Honor Magic V2, have performed exceptionally well, ranking first among all foldable models in Q3 2023 in China. In short, China’s smartphone market dynamics are evolving, and Q3 reports alone were enough to offer intriguing revelations. 

That also means that the race to dominate in shipped units is getting more fierce in Mainland China. This week, the founder and CEO of Xiaomi, Lei Jun, posted on Weibo that the company has sold more than one million units of its latest Xiaomi 14 in less than two weeks.

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Huawei is poised to take up Nvidia’s position in China’s AI chip market

With back-to-back news of local Chinese smartphones setting new records, it could only mean one thing: the competition is intensifying in the domestic market, and recent Apple and Huawei releases were not an isolated scenario. “It is true that [Xiaomi 14 sales] have surpassed 1 million units, but the shortage in stock remains severe,” Lei posted on Weibo on Tuesday, responding to another user’s question. 

The Xiaomi 14, Xiaomi’s latest flagship smartphone, was introduced in China on October 26, following Huawei’s resurgence with its Mate 60 series in late August and the launch of the iPhone 15 in September. Xiaomi’s latest handset represents a departure from the brand’s previous focus on budget-friendly handsets. Notably, it is the first smartphone powered by Qualcomm’s new Snapdragon 8 Gen 3 chipset and features Xiaomi’s new Android-based operating system, HyperOS.

An impending “structural change”?

Although the iPhone 15 was launched in the usual month in which Apple  annually releases its new products, this year’s sales have been different for the US tech giant in China. Kuo wrote on his X account that “the iPhone shipment decline in China is higher than expected.” Alongside Oppo and Vivo in China, Apple also experienced double-digit decreases in sales, based on Counterpoint’s data.

Considering that, Kuo believes China’s smartphone market will face “a structural change” with Huawei’s return and declining iPhone demand, which he predicts will continue until 2024. He based his forecast on Apple’s projections of its 4Q23 revenue, which is anticipated to be similar to 4Q22, “suggesting that Apple’s 4Q23 momentum is weaker than expected, primarily due to a decline in iPhone demand in the Chinese market,” Kuo added.

The post Xiaomi joins Huawei in reigniting the smartphone market in China appeared first on TechHQ.

• Although worldwide smartphone revenues showed no YoY growth in Q3, Apple took the lead in the market.
• It recorded its highest-ever quarterly revenue and revenue share, driven by solid sales of the iPhone 15 Pro Max.
• During July-September, Apple increased its market share in China.

Last month, Apple CEO Tim Cook made a surprise visit to China. The trip came less than a month after the release of the Apple iPhone 15, the company’s flagship smartphone, which received a relatively tepid response in the company’s third-largest market. According to a Counterpoint Research report released not long before, the iPhone 15 series unit sales for the first 17 days of sales in China were down 4.5% compared with the iPhone 14.

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The reason for the lukewarm reception from the Chinese market is Huawei, which has reclaimed its position as the leading smartphone manufacturer in China, surpassing Apple. Huawei, just weeks before the iPhone 15 launch, surprised the world with its latest 5G-capable Mate 60 smartphone series, which was hailed as a victory amid US sanctions.

Making matters more complicated for Apple was the fact that the iPhone 15 launch coincided with a government directive to expand a ban on using iPhones in government agencies and state companies across China. All these factors took the shine off Apple’s new release during the first few weeks of iPhone 15 sales.

But it didn’t last for long. “In mainland China, we set a quarterly record for the September quarter for iPhone,” Cook told Reuters in an interview recently. “We had four of the top five best-selling smartphones in urban China.” The demand for Apple’s iPhones in China has remained strong.

People line up to purchase newly-launched iPhone 15 mobile phones at an Apple store in Hangzhou, in China’s eastern Zhejiang province on September 22, 2023. (Photo by AFP) / China OUT

For context, Huawei was once the largest smartphone manufacturer in China and a significant competitor to Apple. Due to the challenges it faced from US sanctions, Huawei fell to sixth place in the market, and Apple began to dominate the Chinese market. But to reassure investors, Cook, on a conference call with analysts, said that Apple appeared to have gained market share in China in the July-September period, even if the overall smartphone market may have contracted.

Apple’s sales in China have fallen in three quarters of its 2023 fiscal year, which ended September 30. Some analysts, though, remained optimistic about Apple’s demand outlook in China through the fourth quarter as there were signs that a rebound in the broader smartphone market was gathering pace.

“While the latest iPhone series had underperformed in China in the launch quarter due to a shorter pre-holiday shopping period coupled with supply mismatches on the Pro Max, it could see improvement in the year-ending quarter with a strong 11.11 sales event performance,” research consultancy Counterpoint wrote in a note on Friday.

iPhone 15 pushing Apple to new highs

Counterpoint’s report shows that the Pro Max stood as the best-selling variant of the iPhone 15 series, allowing Apple to achieve its highest-ever Q3 operating profit. The report also highlighted that global smartphone market revenues remained flat year-over-year (YoY) despite growing by 15% QoQ to just over US$100 billion in Q3 2023. 

“Apple led the market with 43% share of global smartphone revenues, its highest-ever for a calendar Q3,” Counterpoint’s senior analyst Harmeet Singh Walia noted. That was despite Apple’s latest iPhone 15 series being available for one less week in the third quarter of 2023 compared to its predecessor in the same period last year. 

“This translated into Apple also clocking its highest-ever share of global smartphone revenue for a September-ending quarter,” he added. Consequently, the global smartphone operating profit also reached an all-time high, signaling how the smartphone market has adjusted to the post-pandemic trend of lower shipments, Walia argued.

China’s OEM eroding Apple’s dominance?

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US ban won’t stop Huawei’s 5G smartphone plans

Despite Apple leading the global smartphone market with record Q3 revenue and revenue share, its global smartphone operating profit share remained flat. Counterpoint attributed that to the resurgence of Huawei and Honor, and an increased focus on profitability by other Chinese OEMs such as Xiaomi and OPPO. 

“Counterpoint Research estimates that the Chinese smartphone market declined about 3% during the quarter. Apple’s China revenues fell 2.5% during the quarter. Considering the increased competition from Huawei 5G devices, this is a good signal for Apple and the iPhone 15 series – especially since the Pro Max and Pro were supply-constrained,” research director Jeff Fieldhack commented.

As for Oppo, its focus on phones with higher ASPs, such as foldables — of which the Oppo Find N2 Flip is the top-selling in China — is helping it achieve profitability. Yet, a slowdown in its expansion outside of China and India has brought about a YoY shipment decline, with Oppo’s smartphone revenue in the first three quarters of 2023 being the lowest since the pandemic, Counterpoint’s data shows.

Apple beats Samsung in revenue share, though falls behind on shipments. Source: Counterpoint Research Market Monitor prelimenary data.

Vivo, while remaining profitable, has faced more significant challenges in its home country, China, where its promotions have been less aggressive than those of Honor and Xiaomi. Vivo’s smartphone revenue fell 12% YoY and is almost half that of Q3 2021, Counterpoint’s data shows. 

Q3 was good for Apple.

Xiaomi is the only top five smartphone brand to see shipment increases both QoQ and YoY in Q3 2023 as it strengthened its positions in key markets such as China and India. Xiaomi also offered more affordable mid-range products at promotional prices to both retailers and consumers on the back of solid sales of the Redmi K and Note series, Counterpoint noted. 

That meant the Chinese OEM achieved both revenue and operating profit growth, both sequentially and annually. Samsung’s ASP, on the other hand, grew 4% YoY due to the successful launch of Fold 5, maintained momentum in S23 series’ sales, and a higher flagship share in major product lineups. 

“Nevertheless, an 8% shipment decline in the same period offset the ASP increase, making Samsung’s revenue decline by 4% annually,” the report reads. The full impact of the iPhone 15 series is yet to be seen, according to Counterpoint. 

“While the latest iPhone series had underperformed in China in the launch quarter due to a shorter pre-holiday shopping period coupled with supply mismatches on the Pro Max, it could see improvement in the year-ending quarter with a strong 11.11 sales event performance, which should also benefit other Chinese smartphone vendors,” Fieldhack added.

Moreover, the elongated festive season in India should boost shipments and revenues in the world’s second-largest smartphone market, where pent-up demand and 5G upgrades will also contribute to growth. Overall, Counterpoint believes the global smartphone market could end the year with cyclical change.

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