| China business in 2 minutes|
U.S. Trade Representative Katherine Tai and China’s Vice Premier Liu He met by video over the weekend.
—Jeremy Goldkorn, Matthew Silberman, and Chang Che
|⬆︎||MSCI China USD||91.27||0.88%|
|⬆︎||BNYM CHINA ADR||539.79||2.23%|
Did you know Chinese markets use red for up and green for down? Read more about China's indices and markets here.
|A tutoring company gets the Evergrande treatment|
On Monday, parents and employees of debt-ridden tutoring company OneSmart Education lined up in the rain outside the Shanghai headquarters to demand refunds and unpaid salaries.
- Like developers who collect pre-payment before homes are built, OneSmart and its peers fuel their expansion by encouraging parents to pay months of tuition in advance.
- OneSmart now owes $420 million in prepaid tuition as of February, after Beijing outlawed for-profit tutoring. For protestors, it seems still-legal drama classes won’t cut it.
The context: On Thursday, a leaked screenshot of a WeChat message apparently from OneSmart CEO Zhāng Xī 张熙 that detailed the companies woes went viral on Weibo. Though the company said the screenshot is fake, further leaks from employees claim the company may go bankrupt.
The takeaway: OneSmart’s headquarters look a lot like Evergrande’s headquarters last month: both protests were caused by liquidity crises resulting from a government crackdown on debt-fueled growth. If Evergrande is any indicator, OneSmart shouldn’t expect any help from Beijing.
|Italian brands make their post-COVID move on China|
Italian fashion brands Dolce & Gabbana, Giorgio Armani, Prada, and Salvatore Ferragamo are planning a major push into China in the post-pandemic era on the back of booming sales.
The context: D&G’s sales rebounded some 20% this year, approaching pre-pandemic levels, and Ferragamo’s are up 83% in Q2. But Italian luxury is facing strong competition from Chinese brands like ICY, who have been able to avoid political trouble such as controversies over Xinjiang cotton, and publicity mishaps like Dolce & Gabbana’s controversial video of a Chinese model awkwardly eating Italian food with chopsticks.
|What else we're reading|
- Huawei does health: Huawei’s new wearable ECG monitor was approved for production, and the company has three more heart- and blood pressure-monitoring devices waiting for the green light.
- Will they, won’t they?: Xiaohongshu, a social e-commerce fashion company with over 300 million registered users, is denying media reports that it is planning a $500 million IPO in Hong Kong.
- Crypto collapse: After last month’s blanket ban on domestic crypto trading and mining, regulators want to choke off Chinese and foreign investment in mining, too.
- Torrential downpour: Following days of flooding, at least five people are dead and 120,000 people displaced in the northern Chinese province of Shanxi.
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