Data Sheet—Why Canada Is Pursuing Its Own China Trade Deal
Hello from Guangzhou, China, where the sunny skies have turned overcast, but global business and political leaders remain cheerfully optimistic about China’s future.
Everything is big here, including the companies presenting. I already mentioned that our opening day began with fireside chats with the CEOs of three of the biggest companies operating in China: Alibaba, Apple, and Tencent. (I wish Jeff Bezos, whose business has struggled in China, had been here; then we could have coined a new label: Triple A plus T.)
Wednesday afternoon I interviewed Terry Gou, the legendary Taiwanese founder of Foxconn, which rose to fame by manufacturing in China for Apple, Dell, Samsung and just about any other consumer electronics manufacturer who matters. Gou spoke favorably about the businessman-President of the United States and Foxconn’s planned $10 billion investment in Wisconsin. He also stressed that Foxconn is far more than a “contract” manufacturer these days because it adds design, materials-science, and other inputs for its clients. Foxconn had $140 billion in revenues last year and employs 1.3 million people, by the way. That’s big.
Speaking of big, we had dinner Wednesday night at the massive Sun Yat-sen Memorial Hall in Guangzhou, where we watched a glorious dance performance that married ancient Cantonese opera with hip-hop themes. Really. It was inspiring to see a projected image of “Fortune” emblazoned on the side of the hall. A revolutionary who founded modern China, Sun is acceptable to all sides of the Chinese political debate, a dinner companion of mine explained. Sun also was a native of Guangdong province, of which Guangzhou is the capital.
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Thursday morning I moderated a panel on artificial intelligence. The star of the show was Liu Qingfeng, chairman of IFLYTEK, which is working on mind-blowing speech recognition technology that will be able to do things like allow a driver to instruct their car what to do. This is a company to watch.
Financier Henry Kravis and AB InBev CEO Carlos Brito both talked up their China investments, KKR’s in animal husbandry and AB InBev’s in beer. Brito said that until recently China absorbed best practices from the rest of world but now is exporting them.
Finally, Canadian Prime Minster Justin Trudeau—who appeared onstage with no jacket, rolled-up sleeves, and a not-quite-tightened tie—defended the possibility that Canada will conduct a bilateral trade deal with China. Asked how China’s human rights record will sit with Canada’s progressive citizens Trudeau said: “Every trade deal in the world is by definition between two different places. There’s always going to be a figuring out of how to interface two different systems in a way that is mutually beneficial.” He called China a “world leader” on environmental policy, an attribute Canadians will appreciate. On balance, his was a diplomatic echo of Apple’s Tim Cook’s “in the arena” comment the day before.
Incidentally, Fortune and Canada made big news Thursday: Next year’s Fortune Global Forum will be in Canada. The prime minister welcomed the entire audience to the event.
Ticket to ride. Should we switch the name of the newsletter today to the China & Bitcoin digest? After Adam’s report from Guangzhou, here’s all the digital currency news that fit to print (digitally, of course). The price of bitcoin blew through $15,000 today, up 50% IN THE PAST WEEK. Meanwhile, hackers broke into currency mining operation Nicehash and stole $64 million worth of digital coinage.
The price machinations were too much for the online video game service Steam. It decided to stop accepting payments in bitcoin. At the other end of the enthusiasm spectrum, the Australian Securities Exchange said it would start using a blockchain, the accounting ledger technology underlying cryptocurrencies, to record equity transactions.
A day in the life. A state judge in California has dismissed a class action lawsuit against Google over alleged discrimination in pay and promotions for women. Judge Mary Wiss said the plaintiffs’ claims were vague and did not show how specific groups of women were affected by Google’s pay policies.
Come together. Broadcom reported better than expected profits and forecast higher revenue than analysts expected, but the acquisition-hungry chipmaker declined to answer questions about its efforts to take over Qualcomm. “It remains our strong preference to engage in a constructive dialogue with Qualcomm,” CFO Thomas Krause said in his introductory remarks to analysts. Shares of Broadcom gained about 5% in pre-market trading on Thursday.
Helter skelter. After Mozilla switched its U.S. search engine back to Google, Yahoo is suing over what it claims was an improper termination of its deal to provide search results. According to Recode, Yahoo, now owned by Verizon, may have to continue paying $375 million a year to Mozilla even without getting the search business.
FOOD FOR THOUGHT
It’s no secret that Google and its parent holding company, Alphabet, are dealing with a multitude of regulatory and political problems. But according to a report from Recode’s Tony Romm, there was a secret source helping fuel the bad publicity and government pressure: Oracle. The database giant publicly sued Google back in 2010 for allegedly copying its Java software. Behind the scenes, however, Oracle has also been feeding journalists negative stories about Google and lobbying against the search giant’s priorities in Washington, D.C., Romm reports. The Trump presidency has also aided Oracle’s efforts:
President Trump’s American Technology Council Roundtable with Oracle’s Safra Catz, Apple’s Tim Cook, Microsoft’s Satya Nadella and Amazon’s Jeff Bezos, among others. Its chief executive, Safra Catz, served on the team that helped President Donald Trump staff his White House, and she repeatedly has joined him at public gatherings to discuss tech policy. And Oracle has since hired aides like Josh Pitcock, a former chief of staff to Vice President Mike Pence.
Perhaps ironically, Oracle’s ties in 2017 aren’t unlike the bonds that Google had formed with Democrats. One of its top executives, Eric Schmidt, advised Obama on policy and aided his election efforts, and numerous Google employees ultimately landed in Obama’s ranks during his eight years running the country. Now, Google faces a tough task trying to influence the Trump administration, where the likes of since-departed aide Steve Bannon have questioned the company’s size.
IN CASE YOU MISSED IT
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Commentary: Why Silicon Valley Can’t Get Complacent About China By Minh-Ha Nguyen
What’s Driving Walmart’s Digital Focus? Paranoia, Top Exec Says By Brian O’Keefe
How to Watch Amazon Prime Video on Your Apple TV—Finally By Aaron Pressman
I Slept in Tom Brady’s High-Tech Pajamas So You Don’t Have To By Chris Morris
BEFORE YOU GO
Japanese artist Tatsuo Horiuchi creates scenes of forests and mountain ranges, but he’s not using oil paint or water colors. Horiuchi’s medium of choice is Microsoft Excel. How is that even possible? Check out the video here.