Discover more from Emerging World
Emerging Markets Daily - April 6
China Launches Digital Currency, South Korea LG Exits Mobile Phones, India, Pakistan PM Talks?, Tech in Mexico, Chinese Tech Expands to Singapore, and More
The Top 5 Emerging Markets Stories from Global Media - April 6
China Launching Digital Currency, First for Major Economy
The Wall Street Journal
“A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power…”
“Cryptocurrencies such as bitcoin have foreshadowed a potential digital future for money, though they exist outside the traditional global financial system and aren’t legal tender like cash issued by governments. China’s version of a digital currency is controlled by its central bank, which will issue the new electronic money. It is expected to give China’s government vast new tools to monitor both its economy and its people. By design, the digital yuan will negate one of bitcoin’s major draws: anonymity for the user.”
“Beijing is also positioning the digital yuan for international use and designing it to be untethered to the global financial system, where the U.S. dollar has been king since World War II. China is embracing digitization in many forms, including money, in a bid to gain more centralized control while getting a head start on technologies of the future that it regards as up for grabs…”
“Digitized money could reorder the fundamentals of finance the way Amazon.com Inc.disrupted retailing and Uber Technologies Inc. rattled taxi systems. That an authoritarian state and U.S. rival has taken the lead to introduce a national digital currency is propelling what was once a wonky topic for cryptocurrency theorists into a point of anxiety in Washington.”
“Asked in recent weeks how digitized national currencies such as China’s might affect the dollar, Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell have said the issue is being studied in earnest, including whether a digital dollar makes sense someday.” James T. Areddy reports.
South Korea’s LG to Exit its Loss-Making Mobile Phone Business
“South Korean electronics maker LG said Monday it is getting out of its loss-making mobile phone business to focus on electric vehicle components, robotics, artificial intelligence and other products and services.”
“LG’s board approved the shift in strategy and the company expects to fully exit the mobile phone business by the end of July, it said in a statement.”
“LG was once the third-largest mobile phone maker but has lost market share to Chinese and other competitors.”
“LG earlier said it was assessing its strategy as it reported that its sales rose 5% from a year earlier in the last quarter of 2020 but profitability declined due to sluggish sales of premium products.” Rafael Marchante reports
Geopolitics: Pakistan, India Backchannel To Pave Way For PM’s Meeting
“Pakistan’s army chief has launched talks with nemesis India to secure an eventual meeting between the neighbouring countries’ prime ministers, according to three people with direct knowledge of the matter.”
“The back-channel negotiations are being facilitated by the United Arab Emirates and are designed to defuse one of the world’s most dangerous flashpoints, the people said. The steps towards rapprochement were taken two years after a terrorist attack in India brought the two countries to the brink of war.”
“General Qamar Javed Bajwa has told India’s national security adviser that he was prepared to declare a moratorium on fighting in Kashmir, the disputed Himalayan territory that has been a battleground between Pakistan and India for decades, the people said.”
“Any long-lasting peace between the nuclear-armed rivals would redefine the strategic map in Asia…Imran Khan, Pakistan’s prime minister, and India’s Narendra Modi have powerful incentives to achieve peace. Both need to revive their economies after the toll of the coronavirus pandemic while Modi is facing heightened tensions along India’s border with China.” Stephanie Findlay reports.
Tech in Mexico: A Confluence of Latin America, the US and Asia
“Mexico has been known as an up-and-coming tech hub and a gateway to the Latin American market. As an investor focused on developer-centered products, open-source startups and infrastructure technology companies with a particular interest in emerging market innovation, I have been wanting to do some firsthand learning there.”
“One fascinating, though not surprising, observation was how much LatAm entrepreneurs look to Asian tech giants for product inspiration and growth strategies. Companies like Tencent, DiDi and Grab are household names among founders. This makes sense because the market conditions in Mexico and other parts of LatAm resemble China, India and Southeast Asia more than the U.S.”
Knowledge transfer is not the only trend flowing in the U.S.-Asia-LatAm nexus. Competition is afoot as well.
Because of similar market conditions, Asian tech giants are directly expanding into Mexico and other LatAm countries. The one I witnessed up close during my visit was DiDi.
What often happens is entrepreneurs first look to successful startups in the U.S. to emulate and localize. As they find product-market fit, they start to look to Asian tech companies for inspiration while morphing them to suit local needs.
One good example is Rappi, an app that started out as a grocery delivery service. Its future ambition is squarely to become the superapp of LatAm: It is expanding aggressively both geographically and productwise into delivery for restaurant orders, pharmacy and even COVID tests. It’s also introducing new payment, banking and financial-service products. Rappi Pay launched in Mexico just a few weeks ago, while I was still in the country. Kevin Xu reports
Facing Pressure at Home, Chinese Tech Giants Expand in Singapore
“Chinese tech giants are expanding in Singapore as they face a crackdown at home and growing pressure in other key markets -- but they may struggle to find talent in the city-state.”
“Messaging-and-gaming behemoth Tencent is opening a hub and TikTok owner ByteDance is on a hiring spree after establishing a regional HQ, while e-commerce giant Alibaba is investing in property and recruiting.”
“The tech firms are shifting their focus to booming Southeast Asian markets as authorities tighten the screws at home amid concerns about the platforms' growing power.”
“Singapore, a prosperous financial hub, maintains good ties with Beijing and the West, and tech firms have come to view it as a safe bet to expand their operations without upsetting either side”. Martin Abbugao reports.
What we’re also reading…
Crypto Market Cap Surpasses $2 Trillion After Doubling This Year
“The total market value of cryptocurrencies pushed past $2 trillion for the first time, doubling in about two months amid surging institutional demand.”
“Bitcoin, the largest of the more than 6,600 coins tracked by CoinGecko, is worth more than $1 trillion alone after its price more than doubled in 2021 to $58,858. The five next biggest coins -- Ether, Binance Coin, Polkadot, Tether and Cardano -- have a combined value of about $422 billion.” Olga Kharif reports
Pakistan Plans its First Ski Resort to Boost Winter Tourism
“Bid to develop Deosai plains in Gilgit Baltistan as Pakistan’s first winter ski resort”
“Pakistan’s Prime Minister Imran Khan on Tuesday said his government was working on a ski resort’s feasibility in a bid to promote winter tourism in the South Asian nation.” Khaleej Times reports
South Africa's Businesses Dodge Power Cuts by Investing in Renewables
Another punishing round of power cuts has pushed many South Africans to seek alternatives, spurring businesses and entire towns to adopt wind, solar and other forms of electricity generation.
Cape Town, the second-largest city in the country, is also pursuing independent power suppliers, something that it is not technically allowed to do. City engineers have even prepared for net metering – making it possible for households to sell electricity back to the municipality. Other towns and cities are looking to do the same.
US online retailer Amazon, which recently opened a 3,000-employee call centre operation in the country, says it will also open a solar farm in the Northern Cape, a sun-drenched desert region. “This is just the tip of the iceberg,” says Chris Haw, chief executive of the Solar Group, Amazon’s contractor and partner on the project. Gavin du Venage reports
In Webinar/Clubhouse World This Week….
The U.S-UAE Business Council and the Middle East Institute will host a webinar entitled China and the Gulf: Challenges and Opportunities on April 7 at 9 AM US EST time. Fellow travelers Mishaal Al Gergawi, Brian Katulis, and your humble caravan leader, Afshin Molavi, will also join the panel, as well as Deborah Lehr and Yuting Wang.
World Bank/IMF Meetings
We may all be Zoom’ed out, but if you have the time and inclination, the World Bank and IMF will be streaming several of its major forums during the Spring meetings this year. The World Bank 2021 Spring Meetings will take place virtually from Monday, April 5, through Sunday, April 11, 2021.
Featured events include regional briefings, press conferences, and fora focused on international development, issues of debt, economic recovery, vaccines, and climate.
Some of the sessions you can stream from home: