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Some of China’s automobile industry watchers are putting their hopes on a new growth trend, driven by consumer demand for more intelligent cars.

Electric-powered cars were a clear focus for start-ups and foreign auto giants alike at this week’s Shanghai Auto Show. For some in the industry, they say it will be the smartphone-like interface of the new vehicles that will really attract buyers. Those consumers are increasingly using internet-connected services such as food delivery for daily life, especially in China.

“The key point is not new energy. The key is smart,” Fu Qiang, president and co-founder of electric vehicle start-up Aiways, said Wednesday in a Mandarin-language interview translated by CNBC.

“The entire decline in the auto industry, much more, in my personal view — of course has some small connection to the economy — but I think the greater reason is that customers right now are not satisfied with the product mix,” said Fu, formerly president and CEO of Volvo Cars China.

China battery-electric vehicle unit sales forecast (in millions)

Source: Morgan Stanley Research

A nine-month slide in automobile sales in the world’s largest vehicle market has many worried about a significant slowdown in the Chinese economy, and the wallets of a population of more than 1 billion. Last year, uncertainty about the fallout from the U.S.-China trade war and Beijing’s efforts to reduce reliance on debt for growth put a chill on spending, especially on big-ticket items such as cars.

Much of the decline in auto sales in the last two years was the result of a tough comparison with rapid growth in 2016, Alan Kang, Shanghai-based senior market analyst at LMC Automotive, said on Tuesday. He noted a major drop came from decreased demand from China’s smallest cities for domestic auto brands, while premium foreign brands had less of an impact.

“This year will be overall a year of recovery,” Kang said in a Mandarin-language interview translated by CNBC. And despite subsidy cuts, he said he expects sales volume in new energy vehicles to increase to 1.5 million from 1 million last year.

The category — which includes both pure battery-powered vehicles and hybrids — has been a bright spot in China, helped by favorable government policies. Sales grew 62 percent last year, while overall auto sales fell for the first time in more than 15 years, according to data from the China Association of Automobile Manufacturers accessed through the Wind Information database.

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Why Home Depot failed in China



It seemed like a great opportunity.

In the 1990s, the Chinese government loosened regulations on its housing market, allowing its 1.2 billion citizens to own private homes for the first time since the communist revolution in 1949. Home improvement and furniture companies such as Sweden’s IKEA and the U.K.’s B&Q rushed in to meet the need.

In 2006, Home Depot bought the Chinese home improvement company Home Way and its 12 stores in the country. With its booming economy and strong real estate market, China seemed like it would be an easy win for America’s home improvement giant.

But by 2012, Home Depot closed the last seven of its 12 original stores. The company doesn’t break out sales data by country, but data from Euromonitor shows that China accounted for only about 0.3% of Home Depot’s annual net sales.

Analysts say that Home Depot failed to do its homework on the Chinese market, missing the mark on consumer needs and culture.

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If Iran blocks Strait of Hormuz, it won’t ‘be closed for long’



US President Donald Trump speaks with Poland’s President Andrzej Duda(not shown) as they take part in an Oval Office meeting at the White House in Washington, DC on June 12, 2019.

Mandel Ngan | AFP | Getty Images

President Donald Trump said Friday that if Iran were to block the Strait of Hormuz, “it’s not going to be closed for long,” but he did not elaborate on whether the United States had an obligation to keep open the international shipping gateway, which is critical to the oil industry.

“They’re not going to be closing [the strait],” Trump said in response to a hypothetical question during a telephone interview on “Fox and Friends.”

“They know it, and they’ve been told in very strong terms. We want to get them back at the table, if they want to go back,” he said, referring to the administration’s ongoing efforts to start bilateral negotiations on a new nuclear deal with Iran.

“I’m ready when they are, but whenever they’re ready, it’s OK. And in the meantime, I’m in no rush. I’m in no rush,” he added.

Earlier this year, Iran threatened to close the strait in response to a U.S. decision to end waivers on reimposed sanctions for companies that export oil from Iran. However, analysts question whether closing the channel is feasible, given the large American naval presence in the strait and the portions of coastline that are controlled by Oman and the United Arab Emirates.

The president was responding to attacks Thursday on two oil tankers in the Gulf of Oman, south of the strait, for which the United States has blamed Iran. The Strait of Hormuz is a crucial maritime shipping channel that serves as a gateway for up to a third of all the world’s tanker-carried crude oil and petroleum products.

Iran denies any involvement in the attacks. On Thursday, Iran’s mission to the United Nations said in a statement: “Iran categorically rejects the U.S. unfounded claim with regard to 13 June oil tanker incidents and condemns it in the strongest possible terms.”

But Trump and members of his administration, including Secretary of State Mike Pompeo, have left no doubt about whom the United States holds responsible for the attacks, citing video evidence they say shows members of Iran’s Revolutionary Guard Corps removing an unexploded mine from one of the ships after it was ablaze.

“Iran did do it. That was the boat, that was them,” Trump said.

Thursday’s attacks were the second time in just over a month that ships have been attacked by forces the White House says are directly tied to the Iranian regime. On May 12, four tankers in the same area were attacked.

Nonetheless, Trump argued that Iran has “changed a lot since I’ve been president.”

“They were unstoppable, and now they’re in deep deep trouble,” Trump said. He did not, however, explain the relationship between these apparently positive changes and the recent attacks, which have rattled international petroleum markets and raised the specter of armed conflict in the Middle East.

“When I came into office, they were an absolute terror, they were all over the place, they were in Yemen they were in Syria, we had 14 sites of conflict, and they were in charge of every single place. They were a nation of terror,” Trump said.

The president claimed that the U.S. decision to pull out of the Iran nuclear deal last year and reimpose sanctions on Iran has had a positive impact by pressuring the Islamic Republic to return to the negotiating table in order to hash out a bilateral nuclear accord, something which has not happened yet.

Trump claimed without evidence that under the previous nuclear deal, Iran would have acquired nuclear weapons in “five or six years,” adding, “They cannot have nuclear weapons, We have enough problems with nuclear weapons, which is one of the great difficulties of the world.”

The president did not appear to have a ready answer to the question of how the United States intended to stop attacks like the ones on the two oil tankers.

“We’re going to see how to stop these outrageous acts,” Trump said in response to a question about what the United States intended to do next. “We’ll see what happens, and we don’t take it lightly, I can tell you that.”

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Disney on pace to earn $9 billion at the global box office in 2019



Bob Iger

Stephen Desaulniers | CNBC

Disney has a shot at the impossible in 2019 — earning more than $9 billion at the global box office.

The entertainment giant has been a box office behemoth for the last five years, setting and then smashing its own records in the film industry over and over again. In 2016, the company’s films earned a record $7.6 billion globally. Last year, the company nearly broke that record again, reaching $7.3 billion. Domestically, Disney made a record $3.09 billion in 2018.

Both of those records could be passed in 2019.

“I would say they should finish pretty substantially above where they finished last year,” Doug Creutz, analyst at Cowen, said. “… I think it’s going to be above eight [billion dollars], it might be above nine.”

Through May, Disney has earned $1.6 billion in North America and more than $4 billion worldwide, according to data from Comscore. Its closest competitor so far this year is Warner Bros., which has earned $702 million domestically since January, about half of which is from “Aquaman,” which was released in December 2018.

Disney has a stellar film slate in 2019. Already, it has released two massive Marvel films — “Captain Marvel” and “Avengers: Endgame” — as well as two live action remakes — “Aladdin” and “Dumbo” — and the nature documentary “Penguins.”

There’s still more to come. Next Friday, a new “Toy Story” film opens, then there is a live action remake of “The Lion King,” “Maleficent: Mistress of Evil,” “Frozen 2” and the final film in the Skywalker saga, “Star Wars: Rise of Skywalker.”

A strong slate

Only 13 films have done half a billion or more at the domestic box office, and nine of those are Disney films.

“They could have five films break half a billion dollars in domestic box office this year,” Creutz said. “Last year they had three.”

“Avengers: Endgame” has already pulled in more than $825 million domestically. Creutz pointed to “Toy Story 4,” “The Lion King,” “Frozen 2” and “Star Wars: The Rise of Skywalker” as the other films that could be destined to haul in $500 million or more in North America this year.

Neil Macker, analyst at Morningstar, noted that “Toy Story 4” will likely make around the same as “Incredibles 2,” which took in $608 million in the U.S. and $634 million internationally.

“A billion-type number would be reasonable for that, if not a little higher,” he said, before noting that “Frozen 2” could earn even more than that. Its Thanksgiving release is a prime date for families to take their kids to the movies and even offers the chance for the film to be watched multiple times during that weekend.

Disney releases Frozen II trailer to hit theaters in Nov. 2019.

Source: Disney

As for “Lion King,” Macker said he wouldn’t be shocked if it broke $2 billion globally. Some analysts even believe that it could be the film that finally dethrones “Avatar” as the highest grossing film of all time. It hits theaters on July 19.

The success of “Maleficent: Mistress of Evil,” which comes out on Oct. 18, is harder to predict. While the first film earned more than $750 million globally, Disney has only released one sequel to one of its live action remakes — and that one didn’t fare well. “Alice Through the Looking Glass,” the sequel to “Alice in Wonderland,” only made $77 million in its domestic tally and $222 million overseas.

Still, Disney will end 2019 on a high note with the release of “Star Wars: The Rise of Skywalker” on Dec. 20. The much anticipated finale to the Skywalker Saga will only have a brief window of ticket sales in 2019, but if its predecessors are any indication, it should haul in around $500 million in the U.S. before the close of the year.

2015’s “Star Wars: The Force Awakens,” earned $651.9 million in the two weeks after its Dec. 18 release and 2017’s “Star Wars: The Last Jedi” earned $517.2 million domestically between Dec. 15 and Jan. 1. Even “Rogue One: A Star Wars Story,” which was not a franchise film, earned $408 million during its December run in 2016.

And that’s just the Disney titles. With the acquisition of Fox earlier this year, Disney has nine additional films in its lineup: “Tolkien,” “Dark Phoenix,” “Stuber,” “The Art of Racing in the Rain,” “Ready or Not,” “Ad Astra,” “The Woman in the Window,” “Ford v. Ferrari,” and “Spies in Disguise.”

Disney shares have surged 30% since the start of the year, mostly fueled by the excitement around the launch of its streaming service, Disney+, in November. The popularity of these movies helps to support the expectation that customers will be signing up to access this content. 

Race to the top

Disney hasn’t always been a powerhouse at the box office. Only a decade ago, the company was the sixth-biggest earner in the industry and represented about 10.5% of all U.S. ticket sales. In 2018, Disney accounted for a little more than 26% of all U.S. ticket sales.

Source: Comscore

While it has held a significant portion of the market share over the last few decades, it was only in the last five years that Disney has captured such a high percentage of sales. The 2009 acquisition of Marvel Studios and subsequent release of “Iron Man 2” in 2010, which garnered $312 million domestically, helped boost Disney’s market share.

Another boost was felt in the wake of “Avengers” in 2012 and again in 2015 with Disney’s first Star Wars film, “The Force Awakens.”

While 2019 is set to be a banner year for Disney, the company likely won’t have quite the same financial success in 2020.

“They have a huge slate year,” Creutz said, but he warned. “Next year? There’s a lot less.”

However, from 2021 on, Disney has at least secured the holiday box office, as it is set to release a “Star Wars” and “Avatar” film every other year through 2027.

Disclosure: Universal Studios is owned by NBC Universal and Comcast, the parent company of CNBC.

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