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These 7 international retailers want to make a splash in the US

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Most shoppers have probably heard of Zara, H&M, Uniqlo, Aldi or Lidl, all retailers that ventured into the U.S. after they found success overseas.

Now, the number of international retailers — apparel brands, grocers, cosmetics companies and more — looking to move to America is growing at a rapid clip, industry experts have told CNBC. But making a splash in a new country isn’t easy, even for well-established brands. H&M and Zara, for instance, had to pull back on opening new stores as sales rocketed online and foot traffic disappointed in certain cities. There’s often some trial and error involved, as shoppers’ taste preferences vary by market.

“We see many international retailers reluctant to come to the U.S. [after] you’ve seen big retailers take longer to resonate here than elsewhere,” said David Zoba, chairman of the global retail leasing board at commercial real estate firm Jones Lang LaSalle. “It’s not an overnight success.”

Still, there are plenty of brands preparing to make the leap. It’s an opportune time, considering the amount of vacant storefronts and the number of older retailers going bankrupt.

Many of these companies are getting a chance to test the U.S. market by selling goods at a pop-up exhibit called “The Edit” at the Roosevelt Field Mall on Long Island, New York. Simon Property Group, the mall’s owner, last month announced the latest round of brands rotating into the space, and all but one came from overseas.

Many international brands are leveraging their e-commerce expertise to generate bigger sales when they finally do move to America. They also tend to operate on the forefront of proven retail trends by opening smaller stores and pushing fast-rotating inventory.

“If you have a unique product or you’re luxury, that’s what has done the best in the U.S.” so far, Zoba said. “I really think the future [of retail] will have more … international brands.”

Here are seven international retailers looking to grow in the U.S.:

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Some Chinese automakers show off concept sportscars, amid auto market slump

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GAC unveiled its electric sports car prototype on Sept. 26, 2020, at the Beijing auto show.

Evelyn Cheng | CNBC

BEIJING — Some of the flashiest items Chinese companies had on display at the first major auto show since the coronavirus pandemic were concept sports cars.

While vehicle sales for state-owned Guangzhou Automobile Group (GAC) fell 9.87% from a year ago in the first eight months of 2020, following a decline of nearly 4% last year, the company has been developing an electric sports car called “Enpulse.”

The company revealed the glimmering metallic vehicle to media on Saturday at the Beijing auto show, which was delayed by five months due to the outbreak of Covid-19. 

The convertible electric sports vehicle features a yellow interior with striped pink sections, evoking a rainbow. The car was developed by GAC’s global design team, particularly designers from the company’s Los Angeles office, according to GAC.

“Before the advent of cars, traveling afar was ambitious,” Zhang Fan, vice president of design, GAC R&D, said at Saturday’s launch event, according to an official translation of his Mandarin-language remarks.

“Before the advent of electric vehicles, making sports cars accessible to everyone was also ambitious,” he said, adding, “We hope that the Enpulse will chart the course for the realization of our ambition and make the classic sports car romance accessible to everyone.”

GAC’s vehicle sales climbed double-digits in July and August from a year ago. The company still hopes to achieve its goal of 3% growth this year.

Also attracting a bit of a crowd at the Beijing auto show was state-owned Hongqi’s S9 sports car. The hybrid turquoise vehicle was first unveiled at the Frankfurt auto show in September 2019, according to state media, and claims a maximum speed of 400 kilometers-an-hour. 

Chinese state-owned brand Hongqi showed off its prototype for its S9 sportscar at the 2020 Beijing auto show.

Evelyn Cheng | CNBC

Hongqi, which means “red flag” in Mandarin, is a subsidiary of state-owned auto group FAW.

The brand announced in April it will set up a joint venture with New York-based SILK EV to manufacture the Hongqi S luxury sports car series, according to state media. The article also said Hongqi sold more than 25,000 cars in the first quarter of the year, or an 88% gain over the same period in 2019.  

Auto sales in the world’s largest car market are down 9.7% for the first eight months of the year from the same period in 2019, according to the Ministry of Industry and Information Technology.

But the market has recovered in recent weeks. Auto sales rose 11.6% in August from a year ago, with sales of pure electric vehicles growing more quickly with a gain of 25.6%, according to the ministry.

Automakers often develop high-performance cars to test and exhibit innovative technology. At last year’s auto show in Shanghai, BMW displayed its first electric race car, the iFE.18, shortly after it had completed a race. 

At the 2020 Beijing auto show, Chinese electric vehicle start-up Nio also displayed its sports car prominently at the front of its display area. The EP9 was launched in 2016 and the following year set a record for the fastest self-driving electric car, a feat the company claimed took only four months of technology and software development.

Chinese electric vehicle start-up Nio welcomed visitors to its exhibit at the 2020 Beijing auto show with a display of the Nio EP9 sportscar.

Evelyn Cheng | CNBC

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These cities are at risk of a housing bubble as home prices inflate worldwide

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A Canadian flag flies amid the Toronto skyline

Roberto Machado Noa | Getty Images

Despite a global recession brought on by the coronavirus pandemic, home values in major markets around the world continue to rise, with some at risk of overheating.

Of 25 major cities analyzed, more than half are either at risk of a housing bubble or are overvalued, according to UBS’ Global Real Estate Bubble Index 2020. The index looked at typical signs of a bubble, which include a decoupling of prices from local incomes and rents, and imbalances in the real economy, such as excessive lending and construction activity.

Toronto is the only major North American city in the study that was found to be at risk of a housing bubble. Vancouver, British Columbia, Los Angeles, San Francisco, and New York are considered overvalued, but not at risk of a bubble. Boston is at fair value, and Chicago is the only North American city considered to be undervalued.

Europe appears to have the greatest risk of housing heat, along with Hong Kong. Munich and Frankfurt in Germany and Warsaw, Poland, top the list, with home prices rising more than 5% in the last four quarters. Paris, Amsterdam and Zurich are also in bubble risk territory.

Cities not at risk of a bubble, but considered overvalued, include Vancouver, London, Tokyo, Los Angeles, Stockholm, Geneva, San Francisco, Tel Aviv, Israel, Sydney, Moscow and New York.

Home values have been supported throughout the pandemic by government stimulus, mortgage bailouts and low interest rates. UBS noted that it considers price gains under these circumstances unsustainable.

“It is uncertain to what extent higher unemployment and the gloomy outlook for household incomes will affect home prices. However, it’s clear that the acceleration over the past four quarters is not sustainable in the short run,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a release. “Rents have been falling already in most cities, indicating that a correction phase will likely emerge when subsidies fade out and pressure on incomes increase.”

An aerial drone view of the city centre of Zurich, Limmat River, Lake Zurich, and the Grossmuenster Church stand during the coronavirus pandemic on July 12, 2020 in Zurich, Switzerland.

Christian Ender | Getty Images

Home values fell in just four of the 25 cities analyzed: Madrid, San Francisco, Dubai, United Arab Emirates, and Hong Kong. The last time there were fewer cities with negative price growth was in 2006.

The pandemic has increased demand for larger homes with more outdoor space, and in some cities that has caused a flight to the suburbs. Both New York and San Francisco have seen large outflows of the population either to smaller cities or suburban areas. That makes the future health of urban housing markets uncertain both in the short and long term, especially since no one knows how long the pandemic will drag on.

“The rise of the home office calls into question the need to live close to city centers. Pressure on household incomes cause many people to move to more affordable suburban areas,” said Claudio Saputelli, head of real estate at UBS Global Wealth Management’s chief investment office. “Already debt-ridden or economically weaker cities will have to respond to this economic crisis with tax increases or public spending cuts, neither of which bode well for property prices.”

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U.S., China may slip into a ‘cold war,’ pushing nations to pick sides

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US President Donald Trump and China’s President Xi Jinping attend a business leaders event inside the Great Hall of the People in Beijing on November 9, 2017.

Nicolas Asfouri | AFP | Getty Images

SINGAPORE — The U.S. and China have “diametrically opposed values” and will eventually slip into a “new cold war” in the coming decades, said a China analyst from Fitch Solutions.

“By a new cold war, I mean an all out, perhaps generation long, global economic, military and ideological struggle that could lead to a bifurcation of large parts of the world into a pro-U.S. bloc and a pro-China bloc with significant numbers of countries caught in between,” said Darren Tay from the Asia country risk team at the data research firm.

The split between the world’s two largest economies would likely force Southeast Asian countries to take sides, he said, even though they would want to be “pragmatic” and remain friendly with both countries for as long as possible.

“Being in Asia, the pull from China’s gravity in terms of its size and its influence would be hard to resist,” said Tay during the firm’s Asia Macroeconomic Quarterly Update virtual seminar on Monday.

“That’s not a knockdown argument to say that they will all side with China in that case,” he added. “But there is that risk to consider.”

Opposing values

Explaining what he meant by an “ideological stand-off” between the U.S. and China, Tay referred to a Chinese Communist Party memo circulated in 2013 that identified constitutional democracy and freedom of the press as some threats to the party’s authority. He pointed out that these are what the West considers universal values.

Tay said the technology sector has already become a battleground for the U.S. and China, and is likely to see the largest divide if relations do not improve.

It’s easy to imagine an American consumer not trusting a Chinese tech company to be scrupulous in terms of safeguarding their privacy, and likewise, for a Chinese consumer with regard to U.S. tech companies

Darren Tay

Fitch Solutions

Growing mistrust

But aggressive foreign policy moves such as blacklists and bans by both sides will not be the only thing tearing the countries apart — a lack of trust will also play a part, Tay said.

“It’s easy to imagine an American consumer not trusting a Chinese tech company to be scrupulous in terms of safeguarding their privacy, and likewise, for a Chinese consumer with regard to U.S. tech companies,” Tay said.

That’s especially likely if the U.S.-China relationship worsens and there’s a lot of mistrust “not just between the government but between the people of these two major world powers,” he added.

Consumers from both sides already appear to be boycotting products from each other, as nationalism rose after the coronavirus pandemic broke out. A report by Deutsche Bank Research in May said a survey found that 41% of Americans will not buy “Made in China” products again, while 35% of Chinese will not buy “Made in USA” goods.

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