ECONOMIC OPPORTUNITY

Americans are starting businesses during the pandemic

Launching a business in the midst of a pandemic-fueled recession may seem a risky proposition, but many Americans are seizing the moment to become entrepreneurs.

Aspiring business owners applied for licenses to start more than 1.5 million new businesses in the United States between August and October, according to U.S. Census Bureau statistics.

Some new entrepreneurs opened businesses after losing their jobs as a result of the pandemic. Others spotted opportunities in a changing business environment.

Joël Le Bon, a professor at Johns Hopkins University’s Carey Business School in Baltimore, says the crisis has served as a stress test of the resilience of the U.S. economy. Amid hardship, opportunities have emerged, Le Bon said, especially for businesses that provide digital services — such as in the e-commerce, telecommunications, information technology and telemedicine sectors.

Meanwhile, industries where a physical experience is critical are having to adapt, Le Bon said, citing higher education, transportation and personal fitness.

Dozens of retail stores filed for bankruptcy protection in the first half of 2020, a pace that far exceeds retail bankruptcies for all of 2019, according to the Associated Press.

Small businesses are the backbone of the U.S. economy, and the relatively easy process of registering a new business — which takes an average of four days — adds incentive to take the leap.

Here are several entrepreneurs who recently started businesses during the pandemic.

Jennifer DeChant took over the Bath Sweet Shoppe in Bath, Maine, in June, soon after her prior employer required she move to keep her job.

Running the candy store allows DeChant to stay closer to home and provide comfort for those seeking a measure of normalcy.

“Chocolate is a coping mechanism,” said DeChant, who offers online ordering and curbside pickup as well as in-store shopping. “Customers want to be supportive of small businesses, and everyone has a good time in a candy store.”

Olivia Hutchison and Brianna Goad, who are sisters, started a web design and marketing firm — called Fetch: Branding & Marketing — in Johnson City, Tennessee, in June, after seeing how the pandemic put pressure on business owners. Coming from a family with small-business experience, “we decided to try and do our part to help the small business owner” succeed, Hutchison said.

The company offers web design and marketing solutions to help clients “establish and maintain the online presence they deserve” without breaking their budgets, Goad added.

Cody Warden and Tammy Nguyen, of San Diego, started their plant nursery, IvyMay & Co., in June to liven up homes as people spend more time indoors.

“We built our business around the idea of lockdown and quarantine,” Warden told a local news outlet.

They sell houseplants grown in a converted chicken coop and use contactless delivery to reduce health risks.

The pandemic “cast a dark shadow over Americans,” compromising people’s physical and mental health, Warden said. But houseplants are therapeutic, Nguyen said: Plants “make homes feel more alive” and boost a sense of well-being.

ECONOMIC OPPORTUNITY

U.S. moves to protect investors from China’s firms

The People’s Republic of China has long prohibited Chinese companies listed on U.S. stock exchanges from complying with U.S. regulatory requirements designed to protect investors, claiming compliance would violate PRC laws on national security information.

The failure to meet basic disclosure requirements has enabled companies like Luckin Coffee Inc. to mislead investors. In April, the Beijing-based coffee shop chain admitted to overstating revenues by more than $300 million, a scandal that cost investors when the company’s stock price collapsed, Reuters reports.

The Trump administration has proposed new requirements that would protect investors by ensuring that companies listed on U.S. exchanges disclose audit information with the Public Company Accounting Oversight Board. The U.S. Congress established the PCAOB, a nonprofit corporation, to promote accurate and independent auditing.

The recommendations “will increase investor protection and level the playing field for all companies listed on U.S. exchanges,” Treasury Secretary Steven T. Mnuchin said in an August 6 statement. “The United States is the premier jurisdiction in the world for raising capital, and we will not compromise on the core principles that underpin investor confidence in our capital markets.”

The recommendations unveiled August 6 call for the U.S. Securities and Exchange Commission to ensure Chinese-based companies comply with the same disclosure requirements as other foreign firms listed on U.S. exchanges, including providing PCAOB with the access and information needed to perform audits as required by U.S. law.

The PCAOB establishes standards for public accounting firms and monitors audits for compliance with those standards. The board also investigates and takes action against companies that fail to comply.

The PCAOB conducts oversight of audits of companies based in the United States and numerous other countries, including Australia, Brazil, India, Japan, Mexico, Nigeria, Russia, Spain, the United Arab Emirates and the United Kingdom.

Yet the PRC has long prevented companies that are either based in China or have major operations there from following U.S. requirements for protecting investors, according to a June 4 presidential memo calling for U.S. officials to review and address the problem. The PRC recently passed a law forbidding companies from disclosing audit information without prior consent of Chinese regulators.

In the memo, President Trump says companies around the world list on U.S. stock exchanges to attract investors. But those investors trust that financial information on listed companies is accurate and that U.S. regulators will quickly address fraud.

“It is both wrong and dangerous for China to benefit from our capital markets without complying with critical protections that investors in those markets rightfully expect and deserve,” Trump said. “We must ensure that laws providing protections for investors in American financial markets are fully enforced for companies listed on United States stock exchanges.”

ECONOMIC OPPORTUNITY

U.S. acts to protect investors from Beijing’s military fundraising

President Trump is moving to prevent certain Chinese firms from exploiting U.S. capital markets to advance the Chinese Communist Party’s military, security and espionage objectives and capabilities.

Beijing “is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence and other security apparatuses,” Trump said in a November 12 executive order.

The order deems the People’s Republic of China’s military-industrial complex an “unusual and extraordinary threat” to U.S. national security, foreign policy and economy and declares a national emergency to address that threat.

The action prohibits U.S. individuals and entities from conducting transactions in publicly traded securities of companies the U.S. government has designated “Communist Chinese Military Companies.” The order also prohibits transactions in securities that are derivative of or otherwise related to such securities.

The 31 companies designated to date include the China Communications Construction Company, which is advancing the PRC’s military expansion into the South China Sea, and the telecommunication firm Huawei, which U.S. officials say poses significant risks to global data integrity and privacy and facilitates Beijing’s repressive policies in Xinjiang province.

“Many of these companies are publicly traded on stock exchanges around the world, and individual investors in the United States can unknowingly provide funds to them through passive institutional investment vehicles such as mutual funds and retirement plans,” U.S. National Security Advisor Robert O’Brien said in a November 12 statement.

The executive order notes that through its national military-civil fusion strategy, Beijing compels civilian Chinese companies to support its military and intelligence activities. Chinese companies are required by law to comply with PRC demands to turn over technology and information to which they have access.

The prohibition on transactions in securities related to designated companies will go into effect January 11, 2021, and companies and investors will have until November 2021 to divest their portfolios that existed before the order.

In July and August, the U.S. Department of State urged universities and businesses to divest from Chinese companies that contribute to CCP human rights abuses and intellectual property theft.

ECONOMIC OPPORTUNITY

USAID helps hurricane survivors in Central and South America

Since Hurricanes Iota and Eta tore through Central and South America in November, the U.S. Agency for International Development (USAID) has allocated nearly $48 million in humanitarian assistance to help storm-affected families in Colombia, Guatemala, Honduras and Nicaragua.

“Our prayers are with the people of Central America and Colombia suffering from the impacts of Hurricanes Iota and Eta,” Secretary of State Michael R. Pompeo said on Twitter on November 21. “The people of the U.S. are behind you.”

Both hurricanes have affected more than 7 million people in Central America alone.

To lead the U.S. government response, USAID deployed a Disaster Assistance Response Team that has been on the ground since November 17 in Central and South America. Team members have assessed damage, identified priority needs and coordinated with local authorities and humanitarian partners to provide aid.

In the beginning phases of the response, many communities in Guatemala and Honduras were isolated due to storm damage and became extremely difficult to reach.

USAID requested the special capabilities of the U.S. Department of Defense to transport supplies to communities in need. The U.S. Embassy in Guatemala’s International Narcotics and Law Enforcement office, in cooperation with Guatemala’s Aerial Task Force for Counter-narcotics and Counter-terrorism Interdiction, flew 99 helicopter missions delivering  46,000 kilograms of supplies to 30 communities.

In support of the USAID-led response efforts, U.S. Southern Command’s Joint Task Force–Bravo flew 364 missions, delivering more than 257 metric tons of food, water, hygiene kits, and other relief supplies over the course of 28 days. The U.S. ship USAV Chickahominy transported heavy machinery provided by the government of Colombia to the hurricane-affected Colombian islands of Providencia and San Andrés.

USAID is providing immediate lifesaving aid to people in the affected countries, including food, hygiene kits, safe drinking water, sleeping mats and basic household items like blankets and kitchen sets.

USAID is also working with partners to lay the groundwork for people to return home and start early recovery efforts.

On December 2, USAID announced it was sending an additional 280 rolls of heavy-duty plastic sheeting to provide emergency shelter for 17,000 people in Honduras who are still without homes.

USAID has also focused efforts in:

  • Colombia, where USAID flights helped the government of Colombia deliver 190 metric tons of relief supplies.
  • Guatemala, where 11,150 people received cash assistance; water, sanitation and hygiene (WASH) support; and shelter materials to help rebuild homes.
  • Nicaragua, where 47,500 people received WASH assistance from the United Nations Children’s Fund (UNICEF), a USAID partner.

“It is a core American value to help those in need,” senior USAID official John Barsa said in a December 3 statement, “and as the world’s humanitarian leader, the United States remains committed to providing lifesaving assistance to people affected by the hurricanes.”

ECONOMIC OPPORTUNITY

U.S. works with partners to protect global supply chains

The United States is working with partners to ensure global supply chains stay flexible and resilient and are not overly dependent on any one source of manufacturing or production.

Supply chains are the threads that tie the global economy together. Supply chains carry parts to factories around the world and products to stores and homes.

But when too many of these global supply chains are connected to one country they can be easily disrupted or abused.

This problem was made especially clear during COVID-19, when disruptions in China led to shortages in medical supplies all over the world. And it was made even worse by the Chinese Communist Party’s (CCP) undemocratic one-party rule.

That is why the United States is working with like-minded partners to ensure that global supply chains are stronger and more reliable as it mobilizes its vast resources to support the global economic recovery after the COVID-19 pandemic.

“The COVID-19 pandemic has highlighted the risks of overreliance on single suppliers of goods critical to national security,” said a U.S. Department of State fact sheet on the importance of supply chains. “To protect our businesses and overall prosperity, we must diversify global supply chains,” it added.

U.S. GEAR strategy will help countries rebuild

The work to diversify supply chains is part of the State Department’s Global Economic Activity and Recovery (GEAR) strategy, a broad effort to use the strength of the U.S. economy to help countries rebuild after the pandemic.

The GEAR strategy will facilitate “rapid growth and spur economic recovery that will directly benefit our citizens and the rest of the world,” said Sarah Weber, a senior adviser in the State Department’s Bureau of Economic and Business Affairs.

The strategy also focuses on restoring international transportation and travel networks, supporting U.S. businesses, promoting U.S. exports, deploying financial tools for economic recovery, and enabling food trade and security in the wake of the pandemic’s disruptions.

It builds on the United States’ leadership in the global fight against the COVID-19 pandemic, which includes billions of dollars invested in humanitarian aid, public health and Operation Warp Speed, which has led to the development of safe and effective vaccines.

These developments have helped strengthen commercial ties with U.S. companies and given a boost to developing economies in countries like Bangladesh, Thailand and Vietnam.

Risks of doing business with the People’s Republic of China

The GEAR strategy is not the first time the United States has urged businesses and international partners to look closely at their supply chains in China.

In July the U.S. government released the Xinjiang Supply Chain Business Advisory and issued an open letter to business leaders whose supply chains are connected to the PRC and who do business with PRC firms that support the CCP’s campaign of forced labor, mass internment, and repression against Uyghurs and other ethnic and religious minorities.

The CCP has also abused the PRC’s position in global supply chains, including withholding raw materials from other countries during political disputes.

To preserve and promote security, resilience and prosperity, countries and businesses should prioritize supply chains in countries “where the rule of law is respected and where institutions are accountable to citizens and consumers, rather than countries with a record of predatory economic policies,” the State Department fact sheet said.

ECONOMIC OPPORTUNITY

America launches strategy to reignite global economy

The United States has launched a strategy to mobilize its vast resources to support global economic recovery after the COVID-19 pandemic.

The U.S. Department of State’s Global Economic Activity and Recovery (GEAR) strategy will support this broader effort by enabling food trade and security, deploying financial tools for economic recovery, supporting U.S. exporters and investors abroad, and helping restore international transportation and travel.

“Our aim is to poise the U.S. economy for rapid growth and spur economic recovery that will directly benefit our citizens and the rest of the world,” says Sarah Weber, a senior adviser in the State Department’s Bureau of Economic and Business Affairs.

The United States has led the global fight against the COVID-19 pandemic, allocating more than $12 billion for global health-security initiatives; development of COVID-19 vaccines, therapies and diagnostics; humanitarian aid; and emergency preparedness.

As a world leader in innovation, the United States is also well poised to spur economic recovery. The World Intellectual Property Organization, in its Global Innovation Index 2020 report, ranked the United States among the top three most innovative economies.

American innovation, along with U.S. government support, has played a key role in the development of two COVID-19 vaccine candidates that appear highly effective in clinical trials at preventing infection.

Under the GEAR strategy, economic recovery decisions will rely on evidence-based analysis of the harms caused by the pandemic. The United States will work with industry and international partners to implement measures such as health screening, testing and social distancing at travel hubs, in airports and on airplanes.

The pandemic also revealed risks of over-reliance on single countries for critical supplies, such as medical or telecommunications equipment, U.S. officials say. The GEAR strategy supports existing U.S. efforts, such as the Clean Network, and U.S. warnings that partner nations cannot rely on China’s untrustworthy fifth-generation telecommunications vendors like Huawei, which pose significant security risks.

Through the Deal Team initiative, the U.S. government coordinates the efforts of 14 U.S. agencies to support American companies’ business and investment abroad to bolster countries’ economic and development goals.

“We must diversify global supply chains by prioritizing investment both here at home and in other countries where the rule of law is respected and where institutions are accountable to citizens and consumers,” State Department officials say. “We are regularly engaging with our allies and partners to discuss these imperatives and ensure we are working together to address global supply chain challenges.”

ECONOMIC OPPORTUNITY

U.S. invests billions in Latin America

The U.S. government and private sector continue to invest in Latin America, spurring economic growth across many countries.

The U.S. private and public sectors remain the leading business partner in the Western Hemisphere, particularly in Central and South America. Through its América Crece initiative, the U.S. government is partnering with governments to attract private-sector investment in several areas of infrastructure, including energy, transportation and telecommunications across the region.

Trade between the United States and the Western Hemisphere totals nearly $2 trillion annually, according to Michael Kozak, U.S. acting assistant secretary of state for Western Hemisphere affairs.

“We support entrepreneurship and free enterprise. We believe in transparency and procurements that go to the best bidder,” Kozak said September 1. “And we expect our investors will respect laws on corruption, labor standards, worker safety and the environment. Not every country can say that.”

Since the initiative was launched in 2018 and expanded in 2019, 10 countries have signed América Crece agreements with the U.S., including El Salvador, Ecuador, Brazil, Honduras and Bolivia.

To support efforts under América Crece, the U.S. International Development Finance Corporation (DFC) recently announced its intent to catalyze up to $2 billion in investment in Honduras and Guatemala. This funding will bolster critical infrastructure and support small businesses in Honduras and development projects in Guatemala.

The DFC plans to invest over $12 billion across Central America over the next five years, Kozak said.

And these investments are even more important to help nations recover economically from COVID-19 in the long term.

Under América Crece, the United States has established a program to facilitate bilateral, technical exchanges on economic topics.

The United States led a technical delegation to Ecuador on data privacy, to Peru on infrastructure procurement, and to Peru and Colombia on the digital economy and 5G network security.

As part of the initiative, the United States also hosted a seminar on cybersecurity in the electricity sector in Panama, as well as a panel discussion on promoting energy diversification and resilience in the Caribbean to spur increased investment in that region.

The United States has partnered with Argentina to support offshore safety and governance and with Peru to support sustainable development of energy mineral resources in line with international best practices.

The DFC has enhanced its investment programs on economically empowering women in the region, surpassing its initial $500 million goal and committing to catalyzing an additional $500 million.

In December 2019, the United States expanded its Digital Connectivity and Cybersecurity Partnership by dedicating $10 million to Latin America and the Caribbean. The partnership is an effort to promote an open, reliable, interoperable and secure internet across the globe.

“The United States will continue to be the partner of choice in helping the region overcome this challenge,” Kozak said, “but with or without COVID, growth is the essential condition for cementing democratic institutions and completing the vision of the hemisphere of freedom.”

ECONOMIC OPPORTUNITY

U.S. helps countries build secure 5G networks

Fifth-generation wireless technology is transformative and has the potential to reshape industries. From remote health care to self-driving cars, to critical services such as electrical grids and water systems, 5G has the potential to touch every part of our lives.

We need to be able to trust that 5G equipment and software companies will not threaten the national security, privacy or human rights of citizens and intellectual-property-rights holders.

That’s why the United States has a clear policy on 5G security and is working with countries to develop and build secure 5G infrastructure. By offering financing tools and technical expertise, the United States will enable countries to build their 5G infrastructure without relying on untrustworthy Chinese telecommunications firms or opaque and problematic Chinese loans.

The United States launched the Digital Connectivity and Cybersecurity Partnership to catalyze private sector investments in secure information and communications technology infrastructure and promote an open, interoperable, reliable and secure digital economy.

Launched by U.S. Secretary of State Michael R. Pompeo, this initiative is an inter-agency partnership between the U.S. Agency for International Development, the U.S. International Development Finance Corporation, the Export-Import Bank, the U.S. Trade and Development Agency, the Federal Communications Commission and others.

Under this initiative the U.S. government provides training and technical advisory support to help countries securely deploy 5G technology while also taking advantage of the tremendous economic opportunities enabled by increased connectivity.

The United States has warned countries about the danger of using equipment from untrusted vendors, including companies under the control of the Chinese Communist Party like Huawei or ZTE Corporation to build their countries’ telecom infrastructure.

In the People’s Republic of China, national laws compel companies to cooperate with PRC intelligence agencies, putting everything on a Chinese-built 5G network at risk. Unlike in the United States and other law-abiding nations, there are no independent courts in the PRC that companies can turn to in order to protect their clients from PRC requests for data.

Through its Clean Network Initiative, the United States works with countries to encourage them to use only telecommunications equipment from trusted vendors. The initiative is rooted in internationally accepted digital trust standards and is designed to address threats to data privacy, security and human rights from malign actors, such as the Chinese Communist Party.

The PRC government has been very aggressive in its support for Huawei and other PRC companies when it comes to building 5G networks. Beijing provides funding for Huawei and other Chinese companies and uses them as a part of PRC strategic foreign policy, according to the State Department.

These projects are “subsidized by the government with massive lines of credit and long-duration loans with generous grace periods from state-owned banks in order to undercut competition and penetrate foreign markets more deeply,” Christopher Ashley Ford, assistant secretary of state for the Bureau of International Security and Nonproliferation, explained in 2019.

The United States funds and supports developing countries’ efforts to build their 5G networks to ensure security and reliability.

DFC chief executive Adam Boehler said, “In developing countries where there are safe and trusted telecommunications lines, DFC and USAID bring financing and insurance tools that help lower the costs and mitigate the risks of American companies looking to do business in the region. The combination of these tools with a commitment to the Clean Network serves as a big catalyst for growth.”

Keith Krach, U.S. under secretary of state for economic growth, energy, and the environment, added, “The decision to join the Clean Network sends a powerful signal to the private sector that your country is a trusted partner and a great place to invest.”