When users browse the internet using Safari, their data will be sent through two separate servers in order to mask the user’s identity and what sites they are visiting. As a result, even Apple or the user’s network provider cannot see that data.
It’s a little like a virtual private network (VPN) where users can route their internet traffic through a server located somewhere else in the world to mask their browsing activity.
China so-called Great Firewall effectively allows authorities to block websites from being accessed within China including Google and Facebook. VPNs are often used to get around China’s strict internet controls.
An Apple spokesperson told CNBC that Private Relay will not work in China and some other countries including Saudi Arabia, Egypt, Belarus and Uganda.
Apple said it could not offer the feature in these countries due to local laws.
Using unauthorized VPNs to access blocked websites is illegal in China. While Apple’s Private Relay is not technically a VPN, it acts in a similar way.
courted controversy last year when he criticized banking regulators, and then he disappeared from public life for weeks. Now, his fintech firm Ant Group may be making moves for him to part ways.
It was Ant Group that had to scuttle its highly anticipated $37 billion initial public offering in November after Ma’s critical comments rained regulatory scrutiny on Ant and Ma’s affiliated e-commerce giant Alibaba.
Reuters reported on Monday that Ant is exploring options that would allow Ma to divest of his stake and give up control. Meetings with regulators signaled such a move could help lower the regulatory heat on Ant, Reuters said, citing people familiar with the regulators’ thinking.
Over the same weekend, Alibaba reached a $2.8 billion settlement with regulators, who have been investigating it for antitrust since last fall.
While a record amount, Wall Street analysts who follow the stock said it wouldn’t affect Alibaba’s financials and was “closure” for investors.
On Monday, Truist Securities analyst
lowered his price target on Alibaba to $315 but maintained a Buy rating.
The hefty settlement does not dampen the secular trends of the last few years: Consumers continue to use e-commerce sites in greater numbers and merchants have adjusted their business to take advantage of that.
It may help Ma and Alibaba move on from months of turbulence, however. Ant’s move to become a financial holding company could dampen its valuation if it tries to go public again.
Ma’s Ant stake in Ant could be sold to existing investors or to shareholders of Alibaba, Reuters reported, quoting a source with company ties. He could also transfer his stake to a Chinese investor affiliated with the state, a second source told Reuters.
The Reuters report said officials from the People’s Bank of China (PBOC), and financial regulator China Banking and Insurance Regulatory Commission (CBIRC) have held talks Ma and Ant separately since the beginning of this year, including discussing the possibility of Ma’s exit from the company.
The report quoted an Ant spokesman disputing that last point. “Divestment of Mr. Ma’s stake in Ant Group has never been the subject of discussions with anyone,” an Ant spokesman told Reuters.
LVMH just came out with a strong first quarter 2021 report, reassuring industry watchers that the Covid pandemic is finally in the rearview mirror for the luxury market.
Total revenues reached €14 billion, nearly equal to $17 billion, with organic revenue growth over same period last year up 30%, excluding currency fluctuations and its acquisition of Tiffany. Fashion and Leather Goods were the company’s primary mover, showing 52% year-over-year organic growth.
Since 1Q2020 was such an unprecedented year, the company also provided comparisons to first quarter 2019 and the results were impressive too.
Overall organic growth was reported at 8%, with Fashion and Leather Goods up 37%, followed by Wine and Spirits rising 17%. Selective Retail, under which Sephora and its travel-retailer DFS Group reports, were still underwater compared to 2019, down 30%.
All eyes on China
Assessing LVMH’s continued leadership in the global luxury market, Cowen luxury analyst Oliver Chen explained strength in China, along with the rest of Asia excluding Japan, was a key driver of success. Demand there rose 86% in the first quarter 2021 compared to same period last year.
Such strong growth is even more impressive since Asia is LVMH’s single biggest market, accounting for 34% of total revenues in 2020, with the U.S. trailing at 24% of sales. And further, since the second half of 2020, Asia has been in full recovery mode for LVMH, posting growth in the second-half 2020 of 17%.
With prospects like that, is it any wonder that luxury brands are all in to get their share of the Chinese business. But while China presents the greatest opportunity for growth, luxury brands face a real and present danger by putting all their eggs in the China growth basket. They risk sacrificing their long-term future for short-term gain.
“If the Chinese sneeze, the luxury sector gets pneumonia,” said Luca Solca, senior research analyst for luxury goods at Bernstein, to Jing Daily, in describing luxury brands’ over-dependence on China.
Out of balance
“China is a place where brands risk to get lost in their quest for easy success,” shares Susanna Nicoletti, author of Luxury Unlocked and management lecturer at Instituto Marangoni. She also boasts a resume that reads like a who’s who in luxury, including leadership roles with the top three luxury groups along with several independent luxury fashion brands.
“China’s become a ‘honey trap’ for luxury businesses. Ever since the crisis of 2008, that was the place where most of the growth was for luxury brands,” she states.
Acknowledging that the prospects for making money in China are overwhelmingly attractive – the “honey” – Nicoletti is very clear about the trap too.
“Brands have to make a huge effort to understand the Chinese culture and market. It takes enormous energy and investments,” she states and continues, “Once you are totally focused on one market, the result is you neglect other key markets that have a different approach to luxury, like the United States and Europe.”
“Brands are obsessed with margins, SKUs and things like that in their search for potential sales. But the luxury brands have become lazy in finding new solutions and trying to reinvent their business model,” she says.
Overall, Nicoletti singles out Chanel and Hermes as having found the right balance in China. But many other brands are in danger by catering too much to younger Chinese consumers where extravagant displays of luxury excess, like prominent logos, are valued. By contrast, in the developed Western markets, luxury consumers favor a more understated, classic approach.
The Shanghai-based GMA marketing agency describes this emphasis on conspicuous consumption as “Mianzi,” which means “face,” or to keep one’s honor and reputation in any situation.
“Purchasing luxury items is a symbol of prestige and social status and accumulated wealth. The more you take care of your appearance and lifestyle, the more you show to the world you succeed,” the agency writes in its “China Luxury Market Guide.”
While it may be easy to translate words from one language to another, it is not so easy to translate cultural norms. That’s what Dolce & Gabbana painfully learned when it created a cultural backlash through a social media campaign showing a Chinese woman trying to eat pizza with chopsticks.
“Marketing budgets are invested to develop and nurture emotional relationships. The downside, however, is that brand love can too easilty transform to brand hate,” he warns. “The reason consumers hate luxury brands can vary from poor customer service to ethical and moral transgressions. The concept of hate is a powerful emotion that can manifest into varying degrees of negativity from brand rejection to brand revenge.”
The danger for luxury brands turning love into hate is amplified in China because of the collectivist structure of the society and with social media being a most powerful medium through which it is engendered.
“When the wave of criticism starts, it’s very difficult to stop,” shares Nicoletti.
Levers of power
And luxury brands conveniently forget that China is a tightly controlled economy with the government freely exercising its power to turn on or off the spigot. Brands have no control over diplomatic tiffs and political wranglings, as learned in the most recent U.S.-China trade war. And further back in 2012-2013, luxury good sales took a hit when the government enacted anti-corruption policies.
Most recently Burberry, along with Nike NKE and H&M, as members of the Better Cotton Initiative, got on the wrong side of the government when the BCI announced it would responsibly disengage from sourcing cotton from the Xinjiang region because of alleged harsh treatment of workers there.
Burberry lost a partnership with Tencent to feature virtual designs in its popular “House of Kings” mobile game and Chinese actor Zhou Dongyu ended her contract as a Burberry ambassador. Adding insult to injury, Tencent also owns popular WeChat and Tencent Weibo websites.
Of note: the Better Cotton Initiative, which numbers nearly 100 brands supporting its initiatives for more sustainable and responsible cotton production, has since removed its offending Xinjiang statement from its website, only to get into more hot water because it did not give an explanation for doing so, according to South China Morning Post.
What goes up must come down
From her nearly 25-year perspective working in the luxury industry, Nicoletti reminds us of the cyclical nature of luxury. Two of LVMH’s shining stars today –Louis Vuitton and Dior – were nearly bankrupt before Arnault acquired them in the 1980s.
“This cycle is scaring me a lot, because brands haven’t learned from the past,” she says. And what the past teaches is that creativity and innovation has historically been the engine of growth for luxury brands, not just catering to what’s trendy or fashionable today.
She sees luxury brands adopting an investment bankers’ approach to managing business, leaving behind the passion, creativity, excellence and craftsmanship.
“While they are just looking for the easiest way to make money, the brands have left the soul behind. Just making money can’t be the purpose of luxury. Customers are really looking for a meaningful brand. That is the key point those obsessed with finance have forgotten: the dream of luxury,” Nicoletti concludes.
Electric cars have taken off in China thanks to strong policy support from Beijing, including subsidies. Even though some of these measures have been reduced, research firm Canalys forecasts that 1.9 million electric vehicles will be sold in China in 2021, representing year-on-year growth of 51%.
The Signal Messenger app is displayed on a smartphone in Hong Kong, China.
Roy Liu | Bloomberg | Getty Images
GUANGZHOU, China — Encrypted messaging app Signal has stopped working in China and is now only accessible via a virtual private network (VPN).
China blocks many foreign apps and services including those from Facebook and Google. But Signal had previously not been barred by the so-called Great Firewall.
Signal claims to be end-to-end encrypted, meaning the company itself nor any outsiders can view the contents of messages between a sender and the intended recipient. This also means authorities cannot snoop on messages.
CNBC tested Signal on three different devices and messages did not go through, suggesting it has been blocked by authorities. The app was still available for download via Apple’s China App Store.
Signal was not immediately available for comment when contacted by CNBC.
The messaging app, however, still worked when used with a VPN. A VPN or virtual private network allows users to protect privacy and circumvent internet restrictions by connecting to servers around the world.
Signal being blocked in China highlights the increasing internet censorship in the world’s second-largest economy.
Signal is relatively small in China with 510,000 downloads to date from Apple’s App Store, according to Sensor Tower. But the app provided a rare avenue for sending encrypted messages through a foreign platform without a VPN.
rose 0.3%, while Asian equities finished mostly higher, apart from a drop for the Nikkei 225 index.
Treasury Secretary Steven Mnuchin on Thursday declined to extend emergency loan programs that were set up with the Fed and due to expire at the end of the year. He also asked the central bank to return the unused funds to the Treasury to “allow Congress to reappropriate $455 billion,” he wrote.
Voicing its objection in a statement that followed, the Fed said it would prefer that “the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”
The expiration of five loan facilities, including one that aids small businesses, comes as the nation’s coronavirus infections spiral out of control and states begin to restrict movement. California imposed a 10 p.m. curfew for nearly all residents, while the Centers for Disease Control and Prevention has advised against Thanksgiving travel for the U.S. holiday next Thursday.
“While there are some glimmers of hope for a new fiscal package in the new year, any discord between the two bodies threatens to rattle investor sentiment, where continued monetary and fiscal support has been seen as a given throughout the health crisis,” said Richard Hunter, head of markets at Interactive Investor, to clients in a note.
New virus cases in the U.S. have hit 187,000 in a day, according to Johns Hopkins data. Several states are imposing restrictions, raising the prospect of economic damage, but investors also know that including Moderna’s
Meanwhile, in Europe, European Commission President Ursula von der Leyen said on Thursday the Pfizer/BioNTech and Moderna’s Covid-19 vaccine treatments could receive conditional marketing authorization by mid December.
The 10-year Treasury yield was flat at 0.84%, but it has fallen from the 0.96% hit on Nov. 10 as investors have gotten jittery about the near term.
Here are some of the biggest move by individual stocks:
Pfizer and BioNTech shares rose 2.1% and 7.2%, respectively.
(FL) rose 2.8% after the company reported higher sales and earnings than expected. Earnings per share were $1.21, nearly double the 63 cents Wall Street expected. Revenue was $1.96 billion, while analysts had expected $1.94 billion.