Memo analysis

TO: Alice Liu, CEO of Broadcom

FROM: Tiancheng chu, manager of PRD

DATE: 0708, 2019

China and America reached some agreement in G20 Summit which gives us opportunity as the improved relation between China and the United States can benefit our business because semiconductor business is closely related to China market. Our stocks are getting better because of this news. It is our opportunity to persuade investors to expand their investment in us and we should expand our business as well. Because it is the time to renew our business relation with China companies such as Huawei, which are one of our big customers. Li Yun wrote his news article "China says there will be no trade deal unless existing tariffs are stripped" on July 5, 2019 on CNBC.

Summary

In this news, China’s ministry of commerce expresses that if there is any trade deal, then the United States must to cancel all the tariffs on China products. It showed the attitude that China holds the clear and consistent attitudes on this aspect. In the G20 meeting hold in Japan, China and the United States have reached the negotiation of stopping the trade war. Both the President Donald Trump and President Xi Jinping agree to stop imposing new tariffs and agree to start to negotiation. Donald Trump also decided to lose the ban on selling products to Huawei, and China agreed to continue to purchase the agriculture products of America. However, Trump said the current 25% tariffs on the 2,500 billion USD China goods will not be reduced (Li 1). Although China and America reached an agreement which is similar to the agreement reached at the end of 2019 G20 meeting, there are still many issues, including the issues of intellectual property rights, which may become the obstacles for a long-term agreement.

Analysis

The Sino-US economic and trade frictions should ultimately be resolved through equal dialogue and consultation. This news transfers this information that the United States will no longer impose new tariffs on Chinese products and avoid further escalation of economic and trade frictions. The talks seek consensus that will benefit both sides. President Xi Jinping mentioned that China would become a defender of free trade, but President Trump adopted a protectionist policy of American priority'. However, at the G20 Osaka Summit, although US President Trump said he would allow American companies to sell products to Huawei, a few days later, several White House officials said that Huawei was still on the US blacklist and that the United States would only allow ordinary commodities be sold to Huawei. As the two largest economies and trading powers in the world, China and the United States have suffered setbacks in their economic and trade negotiations due to the constant pressure exerted by the United States in the past few years, which has further increased the pressure on the global economy, which is not in the interests of both sides (Magnier 1). At the same time, China and the United States have huge interests overlapping. The two countries should become partners, which is beneficial to China, the United States and the world.

Moving forward

Firstly, we Broadcom should take advantage to this historical opportunity to expand our business especially to China. Because for now we are one of the big suppliers to China enterprises such as Huawei. We should also let the stakeholders such as our investors, employees as well as customers to see the potential lights in this issue. It is time for us to make a good preparation for the following development opportunity. We need to take actions to let all of them know this opportunity in the first place, especially our investors and our customers. In this way, we can obtain a strong financial support to fight in this new trend of opportunity. However, it is necessary to aware that this opportunity has a certain kind of uncertainty as well (Delaney & US bureau chief Owen Churchill 1). There is also a question of America government will follow its own words as it said on the G 20 Summit this year. Therefore, we should not only wait, prepare and see, but also pave a plan B for our next step to ensure our own interests and the interests of our shareholders, employees and customers.

Works Cited

Delaney, Robert, and US bureau chief Owen Churchill. No Big Deal: Trump-Xi Talks at G20 Unlikely to Produce Breakthroughs, Analysts Say. South China Morning Post Publishers Limited, Hong Kong, 2018.

Li, Yu “China says there will be no trade deal unless existing tariffs are stripped”. CNBC 05 07 2019 https://www.cnbc.com/2019/07/05/china-says-there-will-be-no-trade-deal-unless-existing-tariffs-are-stripped.html Accessed 08 07 2019.

Magnier, Mark. US Businesses Relieved at Outcome of Donald Trump-Xi G20 Meeting, but Note that Major Trade Issues Still Loom. South China Morning Post Publishers Limited, Hong Kong, 2019.