Good morning dear readers,
It is news that not only the government in Berlin, but also in Washington should sit up and take notice. Deutsche Telekom and Chinese telecom equipment maker Huawei struck a pact in 2019 that may have circumvented US sanctions. This is suggested by a contract that is available to the Handelsblatt.
The details of the agreement show the interdependence between the German company and its Chinese supplier.
The aim was to prevent a “potential supply risk in relation to Huawei products containing components from the USA”. The US President at the time, Donald Trump, had put Huawei on a black list – so Deutsche Telekom feared being cut off from the supply of the components.
It was therefore agreed to store and manage important spare parts on the European continent. In this way, business relations would not have been dependent on American discretion.
Huawei should bear the costs for storage and also take back products free of charge if Telekom does not need them. The fact that the Chinese apparently got involved shows that the German mobile communications provider was also of strategic importance for them.
On the one hand, the Americans are likely to be “not amused” by this pact, but at the same time it will probably raise eyebrows in Berlin. After all, German companies are actually required to reduce their dependence on China. At the beginning of the month, the federal government announced that it would examine the use of Huawei technology in the 5G network more closely. The telecommunications companies are probably forced to find a new way of dealing with their partners from the Far East in the long term.
Deutsche Telekom is apparently not the only company struggling to comply with the government’s suggested secession with China. On the contrary, the trend seems to be going in the opposite direction. German companies are now relying more on supplies from China for their procurement than they did six months ago. This is reported by the purchasing manager association BME.
The concern of politicians is that overdependence carries risks that could become a full-fledged problem for the economy if geopolitical escalation occurs. Similar to what happened in relations with Russia after the outbreak of the Ukraine war.
For many companies, however, the lure of the Chinese market is too great to turn down. The chemical group BASF will invest another ten billion euros in new production facilities in China by the end of the decade. “I’m not saying that investments there are risk-free,” said CEO Martin Brudermüller at the end of February. But the opportunities that arise are simply greater in the end.
John Waldron is a man who expresses himself rather cautiously, often uses the subjunctive and does not communicate anything rashly. That may be due to his position, after all, as number two at the US investment bank Goldman Sachs, he has enormous responsibility for spontaneous price developments, his words are worth a lot of money. In the Handelsblatt interview, Waldron remains true to his style and at the same time develops some exciting theses that are based on his impressions on Wall Street.
Waldron assumes that the global turbulence in the banking market could also have an impact on the real economy. “Loans are becoming scarcer, which in turn could dampen economic growth,” the investment banker estimates. At the beginning of the year, the prevailing opinion was that the US and Europe could avoid a recession. However, that is no longer so certain.
In view of the banking crisis and the uncertainty on the financial markets, institutional investors are asking themselves the big question: where to put the money? US stocks are particularly unpopular at the moment, while eurozone and emerging market stocks are doing slightly better. But in these uncertain times, another option is coming more into focus: cash. Even if investors probably don’t hoard it under their mattresses or in the kitchen cupboard, the cash quota in the portfolios has increased significantly again recently.
(Photo: Getty Images)
Just send an e-mail to a colleague via Outlook, then take part in a meeting via Teams and upload a document to OneDrive – the everyday work of many people around the world is determined by Microsoft products.
An enormous market power that invites the group to make a profit from it. Since there are hardly any equivalent alternatives to the offers, Microsoft can simply increase the prices – and is now taking advantage of this opportunity again. In the euro area, products such as Office 365 will be around eleven percent more expensive. The company speaks of a “price harmonization” of exchange rate fluctuations.
The new conditions often do not have a direct impact, contracts spanning several years are common. But when the time comes, price increases of 30 to 40 percent could be pending. The Handelsblatt technology experts Thomas Jahn and Christof Kerkmann have summarized why the problem could get worse and how companies can curb usury.
Finally, I recommend that you read our long read on the trend reversal in the real estate market. Because last year, the prices for the concrete gold fell again for the first time after severe price increases in the past.
The brokers, a recently truly prosperous industry, brings the previously unknown difficulties. So it’s an advantage that the housing brokers have made soft-talking a profession, so to speak. Anyone who can sell an unrenovated one-room shack with crumbling woodchip wallpaper directly under the roof as a “loft apartment with retro charm” will also be able to gain something positive from the current market developments.
I wish you a good day full of optimism.
Best regards
Her
Teresa Stiens
Editor of the Handelsblatt
