BLACKWATER USA | DAILY BRIEF

Posted by BW Actual on Apr 7th 2021

BLACKWATER USA | DAILY BRIEF

Iran


* The U.S. and Iran started indirect talks yesterday about the U.S.
rejoining the JCPOA nuclear deal. European diplomats will act as
intermediaries, shuttling between the U.S. and Iranian sides in Vienna.
Initial readouts say the first day of talks was been "successful," which may
mean Iran could agree to roll back some of its violations of that agreement
in exchange for some sanctions alleviation.
* Iran said a ship it has kept in the Red Sea off of Yemen (and
reportedly uses as an IRGC base) was attacked yesterday. Initial reports say
Israel carried out the attack, but Israeli officials have not commented-and
likely will not.



Russia

* Jailed opposition leader Alexei Navalny was moved to a special
medical unit with an acute respiratory infection yesterday. Dozens of
doctors-including some who had treated him before-protested outside of his
prison. His requests to be seen by his own doctors have been turned down.
* Ukrainian Pres. Zelensky called on NATO to create a path for
Ukrainian membership in response to the threat of Russian troops amassing in
Donbass: "NATO is the only way to end the war in Donbass...[Ukrainian
membership] will be a real signal for Russia."



China

* The U.S is considering boycotting the 2022 Winter Olympics as a
statement over China's human rights abuses in Xinjiang.
* Meanwhile, young Chinese are defiantly taking the opposite position
by cancelling Western firms like H&M and Nike that speak out about Xinjiang
in favor of local Chinese rivals. The NYT article pasted below covers that
trend.
* Separately, China's armed forces conducted simultaneous air and sea
military exercises around Taiwan on Monday, which analysts viewed as a
warning to both Taiwan and the U.S.



Jordan

* The royal turmoil in Jordan appears to be settling down: former
Crown Prince Hamzah bin Hussein entered mediation with his half-brother,
King Abdullah II, and then promptly issued a statement pledging allegiance
to the king and the constitution. Then again, some of Hamzah's employees are
still in detention, which suggests this might be a superficial peace.



Nigeria

* There was a massive prison break in southeast Nigeria: heavily-armed
gunmen assaulted a prison with explosives and grenades, and 1,800 inmates
escaped. Police believe the attackers were part of a banned southeastern
separatist group, the Indigenous People of Biafra (not affiliated with Boko
Haram in the north, and motivated by a desire to carve out an independent,
oil-rich Biafran republic rather than by Islamic ideology)-but that group
denied involvement.



DRC

* The UN warned of record levels of hunger in DRC, with 27.3 million
people-one third of the population-facing acute hunger.



Other News

* Greenland's left-wing Inuit Ataqatigiit party won a parliamentary
election on a platform opposing a large rare earth mining project on a
southern Arctic island. That win suggests Greenland may take a tougher
stance on mining and drilling in general for the near future.





As China Targets H&M and Nike, Local Brands See Their Chance (NYT)

Chinese rivals to Western names have improved quality and marketing. Now the
country's defiance could give them an edge with young patriots.



Tim Min once drove BMWs. He considered buying a Tesla.



Instead Mr. Min, the 33-year-old owner of a Beijing cosmetics start-up,
bought an electric car made by a Chinese Tesla rival, Nio. He likes Nio's
interiors and voice control features better.



He also considers himself a patriot. "I have a very strong inclination
toward Chinese brands and very strong patriotic emotions," he said. "I used
to love Nike, too. Now I don't see any reason for that. If there's a good
Chinese brand to replace Nike, I'll be very happy to."



Western brands like H&M, Nike and Adidas have come under pressure in China
for refusing to use cotton produced in the Xinjiang region, where the
Chinese government has waged a broad campaign of repression against ethnic
minorities. Shoppers vowed to boycott the brands. Celebrities dropped their
endorsement deals.



But foreign brands also face increasing pressure from a new breed of Chinese
competitors making high-quality products and selling them through savvy
marketing to an increasingly patriotic group of young people. There's a term
for it: "guochao," or Chinese fad.



HeyTea, a $2 billion milk tea start-up with 700 stores, wants to replace
Starbucks. Yuanqisenlin, a four-year-old low-sugar drink company valued at
$6 billion, wants to become China's Coca-Cola. Ubras, a five-year-old
company, wants to supplant Victoria's Secret with the most non-Victoria's
Secret of products: unwired, sporty bras that emphasize comfort.



The anger over Xinjiang cotton has given these Chinese brands another chance
to win over consumers. As celebrities cut their ties to foreign brands,
Li-Ning, a Chinese sportswear giant, announced that Xiao Zhan, a boy band
member, would become its new global ambassador. Within 20 minutes, almost
everything that Mr. Xiao wore on a Li-Ning advertisement had sold out
online. A hashtag about the campaign was viewed more than one billion times.



China is undergoing a consumer brand revolution. Its young generation is
more nationalistic and actively looking for brands that can align with that
confidently Chinese identity. Entrepreneurs are rushing to build up names
and products that resonate. Investors are turning their attention to these
start-ups amid dropping returns from technology and media ventures.



When patriotism becomes a selling point, Western brands are put at a
competitive disadvantage, especially in a country that increasingly requires
global companies to toe the same political lines that Chinese firms must.



China's consumer protests are "a historic turning point and will have
lasting impact on the Chinese consumers in the long run," Mr. Min said. "The
Chinese consumers don't want to eat the same crap foreign brands have been
feeding them. It's essential that foreign brands respect Chinese consumers
as much as the Chinese brands do."



Foreign brands are far from done in China. Its drivers helped power a jump
in Tesla deliveries. IPhones remain immensely popular. Campaigns against
foreign names have come and gone, and local brands that emphasize politics
too much risk unwanted attention if the political winds shift quickly.



Still, interest in local brands marks a significant shift. Post-Mao, the
country made few consumer products. The first televisions that most families
owned in the 1980s were from Japan. Pierre Cardin, the French designer,
reintroduced fashion with his first show in Beijing in 1979, bringing color
and flair to a nation that during the Cultural Revolution wore blue and
gray.



Chinese people born in the 1970s or earlier remember their first sip of
Coca-Cola and their first bite of a Big Mac. We watched films from
Hollywood, Japan and Hong Kong as much for the wardrobes and makeup as the
plot. We rushed to buy Head & Shoulders shampoo because its Chinese name,
Haifeisi, means "sea flying hair."



"We've gone through the European and American fad, the Japanese and Korean
fad, the American streetwear fad, even the Hong Kong and Taiwan fad," said
Xun Shaohua, who founded a Shanghai sportswear company that competes with
Vans and Converse.



Now could be the time for the China fad. Chinese companies are making better
products. China's Generation Z, born between 1995 and 2009, doesn't have the
same attachment to foreign names.



Even People's Daily, the traditionally staid Communist Party official
newspaper, is getting into branding. It started a streetwear collection with
Li-Ning in 2019. That same year, it issued a report with Baidu, the Chinese
search company, called "Guochao Pride Big Data." They found that when people
in China searched for brands, more than two-thirds were looking for domestic
names, up from only about one-third 10 years earlier.



As with so much in China, it can be hard to tell how much of the guochao
movement involves politics. Building up homemade brands fits snugly with the
Communist Party's desire to make the country more self-reliant. Officials
also want Chinese people to shop more: Household consumption makes up only
about 40 percent of China's economic output, much less than it does in the
United States and Europe.



Patriotism aside, entrepreneurs argue that their ventures rest on a solid
business foundation. Similar trends happened in Japan and South Korea, both
now home to strong brands. Local players better know the abilities of the
country's supply chains and how to use social media.



Mr. Xun's sports brand has half a million followers on Alibaba's Taobao
marketplace and sells at the same prices as Vans and Converse, or even
slightly higher. He said his brand competed by making shoes that fit Chinese
feet better and offering colors favored locally, such as mint green and
fuchsia. He sells exclusively online and teams up with Chinese and foreign
brands and personalities, including Pokemon and Hello Kitty. At 37, he's the
only person in his company who was born before 1990.



The guochao fad has also reinvigorated older Chinese brands, like Li-Ning.
For many years, sophisticated urbanites considered the brand, created by a
former world champion gymnast of the same name, ugly and cheap. Its
signature red-and-yellow color combination, after the Chinese flag, was
mockingly called "eggs fried with tomato," an everyday Chinese dish. Li-Ning
was losing money. Its shares were on a losing streak.



Then the company introduced a collection at New York Fashion Week in early
2018. Its edgy look, combined with bold Chinese characters and embroidery,
created buzz back home. Its shares have risen nearly ninefold since then.
Now Li-Ning's high-end collections sell at $100 to $150 on average, on a par
with those of Adidas.



As ambitious as these businesspeople are, almost everyone I spoke to
admitted that the Chinese brands still couldn't compete with megabrands such
as Coca-Cola and Nike.



Alex Xie, a marketing consultant who works with companies in China, used the
sportswear industry as an example. Nike holds a yearslong lead over Chinese
brands in research and development. It enjoys a deep network of
relationships in the sports world. It works closely with athletes to develop
better shoes, sponsors many events and teams, including China's national
soccer, basketball, and track and field teams.



"It simply has a much stickier relationship with its customers than any
Chinese brand," he said.



But for these Western megabrands, the Xinjiang cotton dispute is a big
challenge that could help their Chinese competitors. While previous outrage
against Western brands such as the National Basketball Association and Dolce
& Gabbana passed pretty quickly, this bout could linger, many people said.



"In the past, some Western brands didn't understand or failed to respect the
Chinese culture mostly because of lack of understanding," Mr. Xun said.
"This time it's a political issue. They have violated our political
sensitivities."



Then, like any savvy Chinese entrepreneur who knows which topics are
sensitive, he asked, "Could we not talk about politics?"