US-Asia Business

US-China Market Watch: PayPal in China, US Stocks Delisting, “Abominable”

Your monthly roundup of the latest US-China business and industry news.

PayPal enters China through acquisition

The People’s Bank of China has approved U.S. payments company PayPal’s purchase of a 70 percent stake in Chinese payments firm, GoPay, which has licenses for online, mobile and cross-border yuan payments services. Neither company disclosed the terms of the deal, but the acquisition makes PayPal the first foreign payment platform to provide online services in China. PayPal made the deal through a Chinese subsidiary and said that the deal is expected to close in the fourth quarter of 2019.

The announcement comes after Chinese officials reiterated their commitment to opening up China’s financial markets to foreign firms, right when the U.S. revealed it was considering curbs on U.S. investments in China. Although there is tough competition from domestic Chinese payment firms, China’s market is huge and presents plenty of opportunities for foreign companies. Its mobile payments market alone is expected to grow to $96.73 trillion in 2023, with 956 million active users.

U.S. escalates trade tensions, considers delisting Chinese firms from exchanges

Chinese and U.S. trade delegations are expected to meet in Washington, D.C. in early October for further trade negotiations. According to some, the impeachment probe could push Trump to seek a limited trade deal with China, but that remains uncertain since both sides are still seeking significant compromises. In the interim, China has already purchased “significant” amounts of soybeans and pork from the U.S. as a trade goodwill gesture, after exempting those two products from tariffs earlier in September. Chinese commerce ministry spokesperson Gao Feng also said that they were in close communication with the U.S. side leading up to the trade talks.

However, there were reports that the Trump administration was considering forcing Chinese companies to delist from U.S. exchanges in a bid to limit U.S. investment in Chinese companies. Currently, there are approximately 150 Chinese firms listed on the Nasdaq, New York Stock Exchange and NYSE American exchange, including tech giants like Alibaba, Baidu and JD.com. However, the U.S. Treasury Department denied having any plans to prevent Chinese companies from listing in the United States.

Animated co-production “Abominable” tops box office

“Abominable,” the first animated co-production between DreamWorks Animation and Shanghai-based Pearl Studio, topped the domestic box office with $20.9 million in its opening weekend. That makes it the best opening for an original animated feature this year and the third original film in 2019 to open at number one in the United States, after Jordan Peele’s “Us” and Seth Rogen-produced “Good Boys.” The animated feature opened internationally with an estimated $10.2 million, earning $31 million globally.

The film, which features the voice of “Agents of S.H.I.E.L.D.” actor Chloe Bennet as protagonist Yi, is the first major studio animated film to have a woman (Jill Culton) as lead director and writer. The story follows Yi and her friends as they go on an adventure across China to return a lost yeti, named Everest, to his home in the Himalayas. According to The Hollywood Reporter, “Abominable” did especially well among Hispanic and Asian markets, which respectively made up 28 percent and 18 percent of the film’s opening weekend audiences.

Juul faces trouble in China

Just days after it launched on Chinese e-commerce platforms, sales of Juul products were halted without explanation. Alibaba’s Tmall and JD.com were selling the electronic cigarette maker’s vaporizers and flavored refill pods before the products were removed. China, which is the world’s largest tobacco consumer with 300 million smokers, represents a large market for Juul, and a company spokesperson said that they hope to make their products available again.

The sudden shutdown comes amidst a U.S. crackdown on e-cigarettes, after a string of serious vaping-related illnesses and deaths made news headlines. State-owned China National Tobacco dominates the domestic tobacco market, and it’s unclear whether China’s State Tobacco Monopoly Administration asked for the removal of Juul products.

Tesla aims to start China production in October

Electric vehicle manufacturer Tesla aims to have its China factory start producing cars in October, although it remains unclear whether it will meet its overall target of producing 500,000 vehicles by the end of 2019. The China factory is integral to Tesla’s goal of boosting sales of its vehicles in the world’s number one auto market.

Although sales of new energy vehicles in China have slowed this year and are likely to decline even further, Tesla’s sales were up 98 percent in the first seven months of 2019, largely thanks to interest in its more affordable Model 3. The factory also will have battery pack production units and an energy center.

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