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China scores an EU investment deal before Biden takes office — and it wants to do more

China wrapped negotiations with the EU on an important investment deal and talked up hopes for more, less than a month before Joe Biden is set to take office.

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European Commission President Ursula von der Leyen, European Council President Charles Michel, German Chancellor Angela Merkel, French President Emmanuel Macron and Chinese President Xi Jinping are seen on a screen during a video conference to approve an investment pact between China and the European Union on December 30, 2020.

Johanna Geron | AFP | Getty Images

BEIJING — China wrapped negotiations with the European Union on an important investment deal and talked up hopes for more, less than a month before U.S. President-elect Joe Biden is set to take office.

China and the European Commission announced Wednesday that the two sides finished talks around a “Comprehensive Agreement on Investment” that gives each region’s businesses more access to the other’s market.

Both sides rushed to get a deal done — Biden is widely expected to marshal the support of traditional American allies to put pressure on China after he takes office, in contrast to the Trump administration. On the European side, there was a desire to finish an agreement before the end of Angela Merkel’s term as German chancellor in 2021, according to a source with the European Union Chamber of Commerce in China.

Negotiations had stalled this year, prior to the U.S. presidential election.

The crucial point at the moment is how the EU and the US work better together to manage relations with China, and I think there’s a real prospect for that with a Biden administration.

Fred Kempe

president and CEO of the Atlantic Council

The EC said China agreed to prohibit “distortive practices” including forced technology transfers — the practice of making companies hand over proprietary tech in exchange for access to the Chinese market.

“China has committed to an unprecedented level of market access for EU investors, giving European businesses certainty and predictability for their operations,” the European Council said in a release.

“The Agreement will also significantly improve the level playing field for EU investors by laying down clear obligations on Chinese state-owned enterprises, prohibiting forced technology transfers and other distortive practices, and enhancing transparency of subsidies,” the statement said.

The Chinese side reinforced that the two parties agreed on that list of contentious issues — all of which have been raised previously by the United States. The U.S. and China have been locked in a trade war for more than two years, with the dispute spilling into technology, finance and beyond.

Late-night press conference

At a late-night press conference on Wednesday, China’s Ministry of Commerce Spokesman Gao Feng signaled that the deal could help set the stage for restoring normal trade relations with the U.S., under certain conditions.

However, part of the rising U.S. frustration is that China has not always lived up to its agreements in the way negotiators initially hoped.

“The crucial point at the moment is how the EU and the U.S. work better together to manage relations with China, and I think there’s a real prospect for that with a Biden administration,” said Fred Kempe, president and CEO of the Atlantic Council. “The question I would ask is, does this agreement advance that or set it back.”

“What the EU will have to do is argue to Washington [that] the standards in this agreement are such that [the United States] would approve of them as well,” Kempe said.

China stays busy striking trade deals

Beijing has fallen short of the purchases of U.S. imports it agreed to in a so-called “phase one” trade deal it reached with the U.S. in January, according to analysis from the Peterson Institute for International Economics. That truce in the trade war had mandated greater U.S. access to markets such as China’s finance industry.

Progress toward a “phase two” deal stalled amid the coronavirus pandemic.

Analysts have pointed out that Beijing wants to build further agreements both to diversify its trading partners and to prepare for a new U.S. approach under Biden. Already this fall, China and 14 other countries — but not including the United States — formed the largest trade pact in history when they signed the Regional Comprehensive Economic Partnership.

At the beginning of 2017, the U.S. was set to lead an almost identical Asia-Pacific deal that excluded China, called the Trans-Pacific Partnership, or TPP. But Trump scuttled the TPP immediately after his inauguration. It had been negotiated by the Obama Administration.

Gao took the time Wednesday to tell reporters about hopes for deals with other countries. He emphasized China’s plans for a new trade agreement with Japan and South Korea. He added China would like to deepen existing agreements with countries such as Singapore, Chile and New Zealand.

Perhaps significantly, Gao did not mention Australia — one of the few developed nations that enjoys a trade surplus with China. Australia drew Beijing’s anger this year by joining with other countries in demanding an investigation into the origin of Covid-19.

‘Not a deal against America’

The EU-China investment deal, about seven years in the making, still needs to be translated and reviewed before being signed. A possible sticking point for the Europeans is alleged forced labor in China’s Xinjiang region. China has committed to work toward ratification of International Labour Organization conventions including one on forced labor.

Joerg Wuttke, president of the European Union Chamber of Commerce in China, said that “for the European side it was really bilateral. It was an attempt to conclude negotiations. This is not a deal against America.”

Wuttke added the talks showed “real improvement in market access” for European businesses and there will be “more openness” in industries such as electric vehicles, renewable energy and finance.

Li Yongjie, an official for treaty and law at the Commerce Ministry, said during Wednesday’s press conference the deal will permit more European investment in services and non-services industries, and mentioned sectors such as automobiles, hospitals and information technology.

The agreement provides legally binding commitments for China to access the European market, she said.

Chinese President Xi Jinping, German Chancellor Angela Merkel, French President Emmanuel Macron, European Council President Charles Michel and European Commission President Ursula von der Leyen held a video conference call Wednesday at the end of the negotiations to discuss the talks.

Negotiations had stalled this year, prior to the U.S. presidential election.

Source: https://www.cnbc.com/2020/12/31/china-eu-trade-deal-beijing-wants-more-agreements-after-europe-deal.html

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Stitch Fix shares surge as online styling service reports surprise profit

Stitch Fix shares jumped after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

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The Stitch Fix application for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Stitch Fix shares jumped 14% in extended trading Tuesday after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Consumers have been splurging on new outfits in recent months, as many head back to school and return to social gatherings. Some have also citied the need for new clothes after either gaining or losing weight during the Covid pandemic.

Here’s how Stitch Fix did compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 19 cents vs. a loss of 13 cents expected
  • Revenue: $571.2 million vs. $548 million expected

Net income attributable to shareholders was $28 million, or 19 cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a share. Analysts had been looking for the company to book a loss of 13 cents per share.

Revenue grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’ expectations for $548 million.

Stitch Fix reported nearly 4.2 million active clients, up 18% from a year earlier. The company said net revenue per active client was $505, surpassing the $500 threshold for the first time ever. Customers have been purchasing more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.

Stitch Fix defines active clients as people who either ordered a “Fix” subscription or bought an item directly from its website in the preceding 52 weeks from the final day of the quarter.

The company also said it had its lowest ever churn rate at the end of the period, meaning its customers are sticking around.

Last month, Stitch Fix finally opened up its direct-buy option, which is now known as “Freestyle,” to the public. This allows people to shop Stitch Fix for individual items of clothing, without needing to sign up for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the year ahead. The company’s next initiative will be to market and raise broader awareness around the offering, she said. Stitch Fix is preparing to roll out a national advertising campaign on the debut.

Early indications are that “Freestyle” is meaningfully accretive to the company’s revenue per active client metric, Spaulding told analysts on a conference call.

“Clients have agency, flexibility and choice while also experiencing a highly personalized shopping experience,” Spaulding said.

For its fiscal first quarter, Stitch Fix said it sees sales in a range of $560 million to $575 million. That’s below analysts’ expectations for $588 million.

For the upcoming fiscal year, Stitch Fix anticipates sales rising 15% or more from the prior year. Analysts polled by Refinitiv had been looking for an 18% increase.

While the entire retail industry is working through supply chain complications, Stitch Fix said it is seeing a small impact, but nothing that will hurt the business in the fall and winter months. The company said it is less reliant on Vietnam, where manufacturing has largely come to a standstill due to ongoing pandemic lockdowns in the region.

As of Tuesday’s market close, Stitch Fix shares have fallen nearly 39% this year. The company has a market cap of $3.8 billion.

Find the full press release from Stitch Fix here.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Source: https://www.cnbc.com/2021/09/21/stitch-fix-sfix-q4-2021-earnings.html

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Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

Market Data Terms of Use and Disclaimers

Data also provided by Reuters

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