BYD COMES TO THAILAND AND CHINA STAKES ITS RARE EARTHS CLAIMS

Hello everyone, this is Cissy from Hong Kong.

I took a personal trip to mainland China over the long weekend, as July 1 is a public holiday marking the handover of the city from British control. The crowd at the checkpoint for the border crossing between Hong Kong and Shenzhen was unbelievable — a little bit chaotic and very noisy, with someone always trying to cut in line. For a moment when I was boarding the train back to Hong Kong, I even felt like I was fleeing a calamity.

Since China reopened its borders last year after the pandemic, Hong Kong people have been flocking to the mainland on weekends to enjoy cheaper food and leisure activities as China’s inflation remains weak. Although the Hong Kong government introduced a number of promotions to encourage local spending, including free museum entries, and some eateries were offering discounts of up to 30 per cent, the overall restaurant business was sluggish over the recent king weekend. Official data showed that around 1.1mn Hong Kong residents went to the mainland between June 29 and July 1, while only 270,000 mainlanders visited Hong Kong.

I hadn’t visited friends in Shenzhen for years. One thing that caught my eye during my short visit was the high penetration rate of EVs in the tech hub: there were so many green-plated taxis with the BYD logo! Perhaps it shouldn’t have come as such a surprise, given that the Chinese EV champion is headquartered in Shenzhen.

Media outlets are always watching to see if BYD’s quarterly sales beat Tesla’s — it happened before but Tesla managed to catch up later. In the second quarter, BYD’s sales reached another record high, primarily driven by aggressive price cuts in China to counter the economic slowdown, but they were still slightly lower than Tesla’s.

Now, new EU tariffs on Chinese EVs are poised to kick in, though analysts predict they will not halt China’s drive into the European market. BYD, meanwhile, is continuing its advance in another market: south-east Asia.

A drive for growth

The same day that new European Union tariffs on Chinese EVs are set to take effect, BYD is opening its $486mn facility in Thailand, where it is also offering buyers steep discounts on its Atto 3 SUV, writes Nikkei Asia’s Francesca Regalado.

The new factory and sales campaign come amid an economic slowdown and a rise in car loan rejections in the country. But BYD’s first factory in south-east Asia, with an annual capacity of 150,000, will not only serve the local market but also export to neighbouring countries and Europe.

However, the factory may not ramp up to that capacity in its first year, as total monthly output at competitors’ local plants has been under 1,000 units, according to industry insiders.

The EU tariff hike could mean inventory in China will pile up, and analysts expect Chinese EV makers to penetrate further into south-east Asia because Thailand has lower tariffs on fully assembled EVs for companies that have pledged to build EV factories there, and most of them are Chinese.

Special deliveries

Amazon is fighting back against rising competition from rivals Temu and Shein by copying their direct-from-China discount model.

In a recent meeting with top Chinese sellers, the US group outlined the new channel, which aims to airship goods to American shoppers from warehouses in China, according to a presentation seen by the Financial Times’ Ryan McMorrow and Tina Hu.

Amazon hopes to have Chinese factories shipping direct by this autumn. The discount goods will move from an Amazon warehouse in China to the US via cargo plane and on into the company’s vast fulfilment system.

The model allows individual parcels to bypass import tariffs through the de minimis rule, which permits Americans to receive packages from abroad valued at under $800 without incurring import taxes.

Temu and Shein’s use of the loophole has allowed a flood of ultra cheap Chinese goods to make it to American shoppers’ doorsteps, but it has also aroused the ire of US lawmakers. Apparently, Amazon thinks those lawmakers won’t close the loophole anytime soon.

Follow the shift

As manufacturers continue to shift away from China amid trade tensions and tepid growth, Singapore’s Temasek-backed property manager CapitaLand Investment plans to deploy up to $110mn in Vietnam to lure manufacturers with potential investment in the south-east Asian nation, writes Nikkei Asia’s Dylan Loh.

The investment will be used to build or acquire industrial factories over the next two years, and the company is currently in talks with Chinese manufacturers to secure potential tenants. In addition to Vietnam, CapitaLand Investment plans to make considerable investments in Malaysia and Thailand, as south-east Asia has become a key focus for industries to diversify their supply chains.

The investment plan comes with the company facing challenges in China. Its net profit dropped 79 per cent last year to $133mn, mainly due to weaker rent demand in Asia’s biggest economy. As of the end of March, CapitaLand Investment had $99bn in assets under management, with China accounting for 34n per cent and south-east Asia for 41 per cent.

Mines all mine

Beijing has made its latest move to weaponise the supply of rare earth materials: According to regulations that will take effect on October 1, these resources belong to the state, and so their entire supply chain — from mining to smelting and separation, processing, distribution and export — will be strictly regulated.

In China, the state already claims ownership of underground resources, but that has not stopped unauthorised extraction and processing of certain rare earth elements within the private sector. The new rules marks China’s latest effort to ringfence its trove of industrially important metals in response to US efforts to restrict Chinese access to advanced chip technology, writes Nikkei’s Shunsuke Tabeta.

Rare-earth elements are vital materials for EVs, lasers and missiles, and China accounted for about 70 per cent of global production last year. Although the US has expanded mining of rare earth ores in an effort to break its dependence on imports from China, it is still reliant on China for smelting and other processing steps.

BYD COMES TO THAILAND AND CHINA STAKES ITS RARE EARTHS CLAIMS

A drive for growth

Special deliveries

Follow the shift

Mines all mine

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