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F-35 simulator Lockheed Martin

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Lockheed Martin boasted a giant display at the Singapore Airshow earlier this month, in which the military contractor sought to boast sales of the highly expensive F-35 throughout Asia.

CNBC got a rare look inside an F-35 simulator, which is used for testing and development of the world’s most advanced fighter jet.

Several F-35s operated by the U.S. military were flown in from a military base in Japan, making it the first time an operating F-35 had been on Singapore’s soil.

Japan and South Korea previously committed to 42 and 40 aircraft, respectively, but the company is hoping to boost foreign military sales beyond the original nations supporting the program.

While the U.S. is the primary backer, a number of countries have agreed to collectively contribute billions of dollars toward the developments costs and place orders for their very own jets. The list includes the U.K., Turkey, Australia, Italy, the Netherlands, Norway, Denmark and Canada.

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Slow income growth is ‘holding back’ the Chinese consumer: Barclays

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Consumer spending in China has largely lagged the country’s overall economic recovery from the pandemic and that sluggishness stems from slower household income growth, according to Jian Chang, chief China economist at Barclays Asia Pacific.

Data released Wednesday showed China’s retail sales once again missed analyst expectations. Official data reported retail sales rose 12.4% in May from a year ago, less than the 13.6% increase forecast by analysts.

Barclays economists said in a Wednesday note they do not see growth in China’s consumption and services returning to pre-Covid levels this year.

“A fundamental issue, I think, that has been holding back the Chinese consumer spending is really the … slower household income growth, and particularly for lower income group,” Chang told CNBC’s “Squawk Box Asia” on Friday.

Read more about China from CNBC Pro

In 2020, China’s cash-strapped poor took on more debt after the pandemic hit job prospects.

Chang pointed to comments from Premier Li Keqiang last year in which he said roughly 600 million people earn just 1,000 renminbi per month (about $155).

She noted that migrant worker salaries have also struggled to recover, posting growth of just 2.5% as compared with 6.5% pre-pandemic.

These are headwinds for Beijing as the Chinese government hopes to promote its “dual circulation” policy, which places greater emphasis on consumption as a key economic driver.

“To improve household consumption share in the GDP you really need to improve household income share in the GDP,” Chang said.

“That means you really need to improve income distribution … which we know that is quite difficult, especially after the global financial crisis and after the pandemic. We really see globally, you know, there is the widening of income gap and the widening of wealth gap,” she said.

Chang said there’s also a gap in where spending occurs. While larger stores and shopping malls have been “quite strong,” Chang said smaller stores are not seeing the same performance.

“If you look at the smaller store sales, which accounts for two-thirds of overall retail sales, that has really been underperforming and is not even half of its growth rate pre-pandemic,” Chang said.

— CNBC’s Evelyn Cheng contributed to this report.

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Hasbro, Mattel monitor China shipping delays as holiday season nears

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A shopper wearing a face mask due to the coronavirus disease (COVID-19) pandemic browses toys at a Target store in King of Prussia, Pennsylvania, November 20, 2020.

Mark Makela | Reuters

There may be fewer boxes under the tree this holiday season, as toymakers grapple with the possibility of a massive shortage in everything from dolls and action figures to vehicles and puzzles.

The coronavirus pandemic created a bottleneck in the global transportation pipeline, which was later worsened by the blockage of the Suez Canal in March. These shipping delays have hit almost every industry, including electronics, apparel and food.

Exacerbating these troubles is a fresh wave of Covid outbreaks in China. All the while, inventory continues to pile up, leading to manufacturing delays. With shipping containers scarce — or worse, more than double pre-pandemic prices — toymakers are faced with tough decisions ahead of the industry’s most important sales season.

“We’re not seeing any panic yet about the flow of holiday goods,” said Jefferies analyst Stephanie Wissink.

She noted that toy companies are just entering the ramp-up period of production for products that ship in September and October for the holidays.

“If we see persistent constraints into late-summer, then we will start to worry a bit more,” Wissink said.

Currently, the industry is seeing delays of two to three weeks, Wissink said. This is consistent with a report from Davidson analyst Linda Bolton Weiser that was published Friday, although Weiser said delays could be as long as a month.

Weiser told CNBC that the toy industry has faced shipping challenges in the past and persevered. She noted that several years ago, there was a workers strike at the Port of Los Angeles that threatened holiday sales.

“Toy stocks tanked, but [Christmas] went off without a hitch,” she said. “Toy companies were able to get their toys loaded on the tops of freighters and unloaded the fastest.”

Weiser said her most recent chat with Mattel a few days ago indicated the company was “still quite confident about their sales growth for the year.”

Representatives for Hasbro and Mattel did not immediately respond to CNBC’s request for comment.

Toy companies are keeping a careful eye on developments overseas, hoping that pressure on the ports will loosen as vaccines are more widely distributed globally, outbreaks are more isolated and more air traffic routes reopen.

For now, toy companies have not passed on additional shipping costs to the customer, Wissink said. However, there is always a possibility that this could change if the shipping situation does not alleviate.

“We note that holiday purchases are very much oriented toward gifting so price sensitivity is somewhat less,” she said. “That said, consumers will notice if there’s a dramatic increase in prices, but we don’t expect that at this stage.”

Both Mattel and Habro shares were recently trading down more than 1% on Friday. Mattel’s stock has gained nearly 9% since January, putting its market value at $6.64 billion. Hasbro’s stock is down 3% year to date, which puts its market value at $12.5 billion.

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How influencers fit into Twitter’s plans to double revenue

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Twitter CEO and Co Founder, Jack Dorsey addresses students at the Indian Institute of Technology (IIT), on November 12, 2018 in New Delhi, India.

Amal KS | Hindustan Times | Getty Images

Twitter’s been on a creator-focused tear.

The company announced its first subscription service earlier this month, called Twitter Blue. It now lets people tip select users through the app, and the company acquired newsletter platform Revue to allow creators to publish and monetize newsletters. It’s also rumored to be close to launching its Super Follows feature, which would allow some users to charge others for select content.

All of this comes after the company set an ambitious goal to double its revenue by the end of 2023 and grow its user base to 315 million daily active users. But it appears creator cuts won’t make a material impact on the company’s revenue anytime soon.

All of Twitter’s current bets in the creator space can be thought of as a type of insurance or a hedge, in case there is a smart way to make money through creator cuts (aside from advertising), Laundry Service head Jordan Fox told CNBC.

“Every platform CEO thinks: what if direct, platform-facilitated creator monetization explodes as a market? What if it goes from a niche offering to a massive revenue driver comparable to or larger than advertising is today? What if we miss it?” Fox later added in an email. “Putting fee structures around this stuff now is the hedge against that scenario.”

Look to Instagram. The social media company said it would temporarily waive fees on its creator monetization products. However, Fox said there’s a reason it wasn’t framed as a free product.

“What if the market becomes huge, and Instagram wants or needs to participate economically? They need to be ready for that, unlikely as it may seem today,” Fox said. Currently, more than 50 million people globally consider themselves creators, according to a report from venture firm SignalFire, and it’s the fastest-growing small business segment.

It’s a creator’s world

Every social media giant has started making bets on creators.

Instagram chief Adam Mosseri recently told CNBC that its parent company, Facebook, wants to have millions of creators making a living through its family of apps. Snapchat will allow users to tip some of its most popular creators, and the company regularly pays people for posting popular content on its short-form video service. Pinterest also introduced a creator fund for a small group of users.

Despite the subscription business model serving as one way to diversify Twitter’s revenue streams, the company still makes most of its money from ads. According to its first-quarter earnings report, advertising makes up more than 86% of Twitter’s revenue.

“Twitter’s core revenue stream will remain its ads business for the foreseeable future. Any money made from creator cuts will be supplementary income for the company,” Jasmine Enberg, eMarketer senior analyst at Insider Intelligence, told CNBC in an email.

EMarketer said it expects Twitter’s worldwide ad revenue to grow 28.7% to $4.03 billion in 2021, after traffic acquisition costs. A social media company’s ad inventory only has value when people voluntarily spend hours a day on the platform. And people do that, mainly, to view content posted by creators.

“Twitter’s value proposition to advertisers is its highly engaged user base. Creators are major drivers of user engagement on social media, and Twitter’s new creator-focused features can help the company attract and retain creators. The end goal is to boost user engagement in order to incentivize advertisers to invest more in the platform, thus increasing Twitter’s ad revenues,” Enberg added.

Social media companies still need creators. And they need them more than the artists need the social media companies.

“You see a lot of experimentation right now where the platforms are flirting with trying to directly monetize creators, but they also don’t want to overstep and alienate them,” Fox said.

That means that while these social media companies want to bring in supplemental revenue through creator cuts, they have to tread carefully. If a company, for example, takes too much of a cut, a creator could decide to focus their time on other apps. The social media company could then, in turn, lose that person’s stream of content and not make a cut of revenue and miss out on advertising dollars.

“For creators whose stock in trade are words and ideas, Twitter has always been the center of the universe, and they’re making smart strategic decisions to keep it that way,” Fox added.

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