Aurelia Butler

Maurice Greig might have expected a well-earned break over Christmas, having spent 2021 struggling with the post-Brexit bureaucracy now required to export his tailor-made gentlemen’s accessories to the EU. But instead the 74-year-old owner of the Greig & Greig Partnership gave up at least part of the festive season in order to pore over UK government technical guidance for new border controls about to be introduced on imports from the EU.Starting in January, UK importers must complete customs declarations in real time; pre-notify the authorities of incoming animal and plant products; and be able to produce proof that the goods they are importing from the EU qualify for tariff-free access to the UK.“It will do my head in,” said Greig in the stockroom of his London boutique, which is filled with samples of expensive handmade leather gloves, belts and fancy-handled Italian umbrellas. “But then I’m only a very small business, I don’t have anyone else to help.” Business groups have warned that the new import controls, which were delayed by one year in order to keep trade flowing, will put considerable new pressure on small businesses in 2022 as they continue to adjust to trading outside the EU single market.Greig & Greig is one of thousands of micro enterprises that the Federation of Small Businesses trade group has warned are insufficiently prepared for the new checks after a membership survey found that only a quarter of businesses were ready. A survey from the Institute of Directors, the bosses’ organisation whose members generally represent larger businesses, found one-third were “not at all prepared” for the changes.Business groups and officials concede that it is impossible to predict exactly how the changes will affect the flow of imports from the EU, which in 2020 accounted for 50 per cent of all UK imports, worth £300bn. Senior government officials responsible for the border told MPs in November that businesses were being contacted about the changes, including on the other side of the Channel, where EU hauliers and exporters will also need to get prepared.The biggest source of concern about possible disruption comes from the requirement for lorries entering the UK to obtain an authorisation code from the UK’s goods vehicle movement service, or GVMS, prior to boarding a ferry. To obtain the code, their paperwork must be in order. From January 1 this will mean customs declarations and duty payments can no longer be deferred by up to 175 days, and animal and plant products must be pre-registered with the UK’s import of products, animals, food and feed system (IPAFFS). Jim Harra, the permanent secretary at HM Revenue & Customs, told MPs on the public accounts committee that “undoubtedly” some EU lorry drivers would be turned away because of the new system but he was “confident” they would soon adapt.

Jim Harra of the HMRC says he is ‘confident’ EU lorry drivers would soon adapt to the new system © Charlie Bibby/FT

From July food importers will also need their goods to be accompanied by health certificates signed off by EU vets and be ready to submit to spot checks if selected at UK border control posts.Harra said government confidence was based on the fact that hauliers had adapted to a similar French pre-declaration system in 2021, when predictions of a reasonable worst-case scenario of tailbacks of 7,000 trucks failed to materialise. Shane Brennan, chief executive of the Cold Chain Federation, said the requirement to gather customs and IPAFFS declarations, often in a tight timeframe, was likely to leave many EU hauliers “playing catch-up” in the early months of 2022.HMRC said it had been sending 14,000 letters a month to EU hauliers to prepare them for the changes. However, haulage groups in the EU told the Financial Times that they expected delays because they had been unable to pre-test the GVMS system. HMRC said it was “live proving” the system with selected organisations.Artur Kalisiak, from TLP, which represents Poland’s big transport companies, said that while it was flagging UK government webinars to its members, 90 per of Poland’s 36,000 haulage companies were small operators with 10 vehicles or less.“We get information and reminders . . . and we pass on this information to our members,” he said. “So our companies are aware of this. How informed other companies are is a different question.”

Waberer’s, a major eastern Europe haulage group, predicts chaos. ‘There will be a lot of clueless drivers backed up at the transit points’ © Akos Stiller/Bloomberg

Waberer’s, one of eastern Europe’s largest haulage groups, was more pessimistic, complaining that it had not been possible to pre-test the GVMS system ahead of the January 1 launch. “We are certain there will be logjams, because we don’t know if the UK system can handle the claims flooding them,” said a spokesperson. “There will be a lot of clueless drivers backed up at the transit points.”As well as new border controls, UK companies trading with the EU will need to show proof that their goods are eligible for tariff-free importation into the UK. Under the “rules of origin” of the EU-UK Trade and Cooperation Agreement, goods must typically be 50 per cent made in the UK to qualify for export to the EU tariff-free. And vice-versa for EU goods being exported to the UK.In 2021 exporters on both sides were given a one-year grace period that reduced the required documentation, but from 2022 companies on both sides of the Channel will need to provide documentary proof that their goods comply if challenged by customs authorities.In December, HMRC told UK traders that if they failed to provide “supplier declarations” for goods they risked paying penalties or being barred from using preferential tariff rates in the future. Trade groups have warned ministers that for smaller businesses the rules of origin process can be confusing and time-consuming, with many not fully appreciating the requirements.

Daniel Pettitt, managing director of Heaven Scent Incense, says government guidance is hard to follow. ‘You click link after link to get to some website. You just get lost’ © Jon Rowley/FT

Daniel Pettitt, managing director of Wiltshire-based Heaven Scent Incense, which makes scented soaps and candles using ingredients sourced from around the world, said he was grappling with the new rules.“We’re starting to ask suppliers for declarations and we know that our products do qualify,” he said, but admitted he was not sure where the information proving this should be lodged when exporting to the EU. He added that, despite plentiful emails from the government about the coming changes, online guidance was difficult to use. “It’s like falling down a rabbit hole. You click link after link to get to some website. You just get lost.” Tanya Marriott, the owner of SoleLution, an independent shoe shop in Bristol that imports shoes from the EU, said the company was still trying to work out its legal position in the event of a dispute over duty with EU suppliers. “As a small business we’re trying to find our way. I’ve attempted to investigate via the HMRC website, and I don’t consider myself new to all this, but it’s not explained in layman’s terms,” she added.Back in London, Greig of the gentlemen’s accessories importer, is still trying to iron out this year’s problems, which include duty payments being charged erroneously on shipments that “originate” in the UK and the EU.“It’s going to be very complicated,” he said of importing his samples from the EU, “because I’m only a micro business. I don’t yet know what the rules are after January 1, but no doubt it will not be straightforward.” More

Imran Khan’s government is set to present Pakistan’s parliament with a series of unpopular austerity measures in an effort to resume a stalled $6bn IMF loan programme, risking a fierce political backlash at a time of deep economic pain.A finance bill is expected to be introduced to the lower house on Wednesday that would cut development spending, end subsidies for areas including electricity and gas and remove sales tax concessions on raw materials and pharmaceuticals.The measures are designed to raise Rs600bn ($3.4bn) in the financial year ending June 2022.The push ahead with belt-tightening follows a deal between the IMF and Pakistani officials last month to restart payments of a financial support package that was agreed in 2019. The measures are necessary to secure the next instalment of $1bn after the loan programme stalled this year.Pakistan’s economy has been mired in a difficult economic cycle, with inflation at its highest level in years and the rupee plummeting 17 per cent against the US dollar since May. A weekly index of everyday essentials such as food and fuel soared almost 20 per cent last week compared with the same period last year.The State Bank of Pakistan has responded by raising the benchmark interest rate twice since last month by a total of 250 basis points, to 9.75 per cent.The bill is expected to pass parliament but the unpopularity of the austerity measures has added to the mounting political challenges facing Khan. Critics said cutting sales tax concessions would disproportionately hurt the poorest, who have borne the brunt of soaring inflation, while opposition parties plan to hold street protests against the government next year.Khan hopes to be one of Pakistan’s few elected leaders to finish out his term, which is due to end in 2023.The prime minister came to power vowing to end the boom-and-bust cycles that have forced Pakistan to seek 12 IMF bailouts since the 1980s. Yet concerns about a spiralling balance of payments crisis forced him to accept the fund’s unpopular terms. Growth in Pakistan has remained relatively robust, with Fitch Ratings expecting it to hit about 4 per cent this year. But analysts said these measures could make life more difficult. “The IMF is saying you need to put in measures to slow down the economy,” said Sakib Sherani, chief executive of Macro Economic Insights, a research company in Islamabad.Shaukat Tarin, Pakistan’s finance minister, argued that the existing concessions and subsidies were distorting the economy. “The IMF is not saying that you don’t give relief to people,” he told reporters. “But they’re saying don’t distort the tax ratio.”

But Shahid Khaqan Abbasi, a former prime minister and prominent opposition leader, said the reforms were being rushed through parliament. Since Khan became the prime minister in 2018, he added, the price of essential daily items has risen as much as 50 per cent. “The reality is that the government has not met the IMF’s conditions and they are seeking to fill the gap. The common citizen will be hit very hard,” he said. “There are serious escalations like [the tariff for] gas and electricity.”Khan’s government will introduce a separate bill to give more autonomy to the State Bank of Pakistan, something the IMF has also sought. The bill will protect the central bank’s governor from being removed by the government and restrict government borrowing.But critics of the bill have argued that the measures will make the central bank unaccountable, with one prominent business leader quipping that its governor would effectively become “Pakistan’s first economic viceroy”. More

The bill swaps, with a three-month tenor, are worth 5 billion yuan ($785.13 million), the People’s Bank of China (PBOC) said in a statement on its website.The operation aims to improve the liquidity of perpetual bonds and support banks’ issuance of the bonds to replenish capital, it added.($1 = 6.3684 Chinese yuan) More

HONG KONG (Reuters) -Hundreds of Hong Kong national security police raided the office of online pro-democracy media outlet Stand News on Wednesday and arrested six people, including senior staff, for “conspiracy to publish seditious publications”.The raid further raises concerns about the freedom of speech and that of the media in the former British colony, which returned to Chinese rule in 1997 with the promise a wide range of individual rights would be protected.Police said in a statement it was conducting a search with a warrant authorising it “to search and seize relevant journalistic materials”.”Over 200 uniformed and plain clothes police officers have been deployed during the operation. The search operation is underway,” the statement said.Sedition is not a crime under the sweeping national security law imposed by Beijing on the city in June 2020.But recent court judgements have freed authorities to use powers conferred by the new legislation to deploy previously sparsely used colonial era laws, including the Crime Ordinance which covers sedition.Authorities say the national security law has restored order after often-violent pro-democracy unrest in 2019 and that it does not curb rights and freedoms. Critics say the legislation is a tool to quash dissent.In June, hundreds of police raided the premises of the pro-democracy newspaper Apple (NASDAQ:AAPL) Daily, arresting executives for alleged “collusion with a foreign country”. The newspaper subsequently shut down.Hong Kong broadcaster TVB said the six people arrested on Wednesday included former board members Margaret Ng, a former democratic legislator, and Denise Ho, a pop singer, as well as acting chief editor Patrick Lam.Stand News posted a video of police arriving at the residence of Ronson Chan, its deputy assignment editor who is also the head of the Hong Kong Journalists Association.”The charge was conspiracy to publish seditious publications. This is the court warrant and this is my warrant card. Your phone is obstructing our work,” an officer is seen saying.Police said in a separate statement that they had arrested three men and three women, aged 34 to 73, and that searches of their homes were underway. It did not name those arrested, in line with its usual practice.The Stand News bureau in an industrial building in the Kwun Tong working class district was partially sealed off by dozens of police, according to a Reuters reporter at the scene. A police media liaison officer on the 14th floor said entry to the office would not be permitted given an “ongoing operation”. He declined to give further details.Four police vans were parked downstairs as dozens of police milled around the lobby. More

December exports in terms of value were seen expanding 22% from a year earlier, slowing from a 32% jump in November, according to the median forecast of 13 analysts.”December shipments are expected to exceed $60 billion in value as demand is strong even as chip prices are declining, and petrochemical products are also enjoying record demand,” said Ye-in Kim, an analyst at Korea Investment & Securities. The nation’s trade ministry said on Dec. 13 annual overseas shipments had reached a record high as of early December this year, supporting an economy that has relied on exports to underpin growth as social-distancing curbs to combat COVID-19 hurt domestic demand. Tuesday’s poll showed imports were seen growing 35.8% from a year earlier in December, also slowing from a 43.6% surge in November.The full-month trade data will be published on Saturday at 9 a.m. local time (0000 GMT). Analysts expect South Korea’s consumer inflation at 3.6% in December, remaining above the central bank’s 2% target for a ninth month in a row.”CPI inflation likely to exceed 2% until the third quarter of next year, and that would justify an additional rate hike by the Bank of Korea from fundamental perspective,” said Lee Seung-hoon, an analyst at Meritz Securities. On Dec. 16, Governor Lee Ju-yeol said he sees the increasing threat of inflation taking hold in Asia’s fourth largest economy, leaving the door open for an interest rate hike as early as January.Median estimate of 14 economists also showed industrial output in November rose 2.5% from October. More

Luxshare Precision Industry is building a massive manufacturing complex in eastern China as it aims, with Apple’s blessing, to break the decade-long hold that Taiwanese rivals Foxconn and Pegatron have on iPhone assembly.Luxshare, China’s most prominent player in the Apple supply chain, is building a 285,000 square metre manufacturing park in Kunshan, Jiangsu province, with a total investment of Rmb11bn ($1.72bn). The sprawling site, covering an area the size of 40 football fields, will churn out millions of iPhones as early as next year.The sheer scale of the project is a sign not only of Luxshare’s ambitions but also of Apple’s growing reliance on Chinese suppliers, a trend that could reshape the global tech supply chain in the long run. Wingtech, another rising Chinese tech manufacturing powerhouse, recently entered Apple’s supply chain and won orders to make the Mac mini and Apple TV, multiple sources familiar with the matter said. Apple also added BOE Technology to its list of premium display suppliers for new iPhones this year.In addition to the new complex, Luxshare has also leased and remodelled an adjacent facility that was previously owned by iPad assembler Compal Electronics, according to company filings and government environmental assessment papers seen by Nikkei Asia.

Luxshare is set to complete the first phase of its new complex around the middle of 2022, according to the construction floor plan and government documents obtained by Nikkei Asia.Armed with the new facility, the Chinese supplier aims to significantly increase its share of iPhone assembly, from about 6.5m units in 2021 to between 12m and 15m units by as early as next year, people briefed on the matter told Nikkei Asia. Luxshare at present builds iPhones in another facility in Kunshan that it bought from Taiwan’s Wistron in the summer of 2020.Apple ships about 200m iPhones a year, with Foxconn assembling nearly 60 per cent of those and Pegatron about 30 per cent.“I went on a business trip nearby and saw Luxshare’s new manufacturing complex. I am shocked by the scale of the complex and the possible capacity it could build for iPhones,” an Apple supplier executive told Nikkei Asia. “The day it threatens Foxconn and Pegatron might arrive earlier than people’s estimate judging from the progress of the new facility.”An executive at another Apple supplier said that although this has been the first year for Luxshare to officially build new iPhones on its own, the company’s assembly performance rate is improving faster than expected and industry peers should not underestimate it.Luxshare and the Kunshan city government held a groundbreaking ceremony in late October. Now, a steady stream of cranes and excavators move in and out of the construction site throughout the day. Thousands of workers have been brought in to speed up construction, several on-site workers told Nikkei Asia.“There are around 2,000 to 3,000 workers on site. The building we are working on will be four floors and we have been asked to finish construction of the factory before the end of this year,” one of the on-site workers told Nikkei in early December. “We are currently building the second floor and the schedule is very tight, so we are working overtime every day.”Another worker told Nikkei Asia they know this is a facility for smartphone manufacturing and said they have been asked to complete phase 1 around April next year.

Thousands of workers have been brought in to speed up construction of the plant, workers have said © Shunsuke Tabeta

The total investment for the project has reached Rmb11bn, including leasing and remodelling the old Compal facility, and it could generate sales of more than Rmb100bn, according to government announcements and documents. It will eventually have a total of 39 production lines. The Kunshan city government said it took three days to approve the record-breaking high-tech investment and grant four important licences, including the construction licence, adding that the schedule for construction has been pushed forward by two months from the original plan.Grace Wang, co-founder and chair of Luxshare, said in a speech in October that it was thanks to the Kunshan government that construction could start so quickly. “It’s hard to imagine that the four key licences can be approved in such a short period of time if we had not personally experienced and witnessed it ourselves,” she said.Luxshare, which shoulders Beijing’s hopes for building a homegrown contract electronics group like Foxconn, is the fastest-growing tech manufacturer among Apple suppliers in terms of product portfolio. It has gone from being a small supplier of connectors in Apple’s supply chain back in 2011 to become the most important China-based components supplier and assembler for the AirPods earphone series, Apple Watch and iPhone. The Chinese tech champion has already expanded its manufacturing footprints to India and Vietnam, where it helps Apple make components and assemble AirPods, and has even ventured into semiconductor assembly to help Apple package and test chips used in its wireless earphones.Jeff Pu, a veteran tech analyst with Haitong Securities, told Nikkei Asia that Chinese tech manufacturers such as Luxshare and Wingtech have long served domestic smartphone makers such as Xiaomi, Oppo and Vivo and now need to expand their market share and seek new growth opportunities, including by targeting the Apple supply chain.“Many Chinese manufacturers, including Luxshare, not only could offer lower prices but also are highly flexible and could offer agile adjustments to meet Apple’s requests, which is what [Apple’s chief executive] Tim Cook values highly . . . They are among the earliest to build manufacturing plants in south-east Asia to help Apple diversify production to avoid US tariffs,” said Pu, referring to tariffs slapped on Chinese goods under former president Donald Trump. “Not to mention they definitely have good government support when it comes to building new plants in China.”Foxconn is still the undisputed leader in terms of manufacturing capability and operation management, and is always Apple’s key partner for new products, Pu said, but Chinese manufacturers such as Luxshare are already reaching a level — in terms of technology and financial performance — that could directly compete with other smaller suppliers like Pegatron and Wistron.Apple declined to comment for this article. Luxshare and Wingtech did not respond to Nikkei Asia’s request for comment.A version of this article was first published by Nikkei Asia on December 22 2021. ©2021 Nikkei Inc. All rights reservedRelated storiesApple’s nightmare before Christmas: Supply chain crisis delays gift deliveriesTaiwan to restrict tech companies’ sales of China assetsChina’s Oppo debuts foldable smartphone to compete with SamsungChipmakers’ nightmare: Will shortages give way to a supply glut? More