Apple, Despite 13% Drop in Greater China Sales… “Very Optimistic about China”
P&G “China, Ready to Add Approximately 200 Million Middle-Class Consumers”
Competition Intensifying with Domestic Companies and China’s Economic Slump Is Risk Factors
Global consumer brands such as Apple, Procter & Gamble (P&G), and Mondelez are not giving up hope that Chinese consumption would recover despite the Chinese market slumping, according to The Wall Street Journal (WSJ) on February 4th, local time. These companies lamented the weakening demand in China during recent earnings announcements, but they still hope for a rebound in the Chinese market.
Apple’s sales in Greater China fell 13% in the fourth quarter of last year due to a slowdown in iPhone and iPad sales. Despite this, Apple CEO Tim Cook said, “We’ve been in China for 30 years and are very optimistic about China in the long run.”
P&G CEO Jon Moeller also mentioned during a recent earnings announcement, “During my six-day stay in China in early January, I met with local employees and government officials and visited the homes of Chinese consumers to discuss their purchasing habits.” He added, “This experience has given me more confidence that the difficulties in the Chinese market are temporary and there will be opportunities for business growth in the coming years. China is ready to add about 200 million middle-class consumers. This is an encouraging signal.”
During its fourth-quarter earnings announcement, Mondelez, the manufacturer of Oreo, stated, “Sales growth in China and other emerging markets has helped boost performance. We still expect China to drive the growth of the global snack market.”
A general sense of optimism is also growing among American executives conducting business in China. The American Chamber of Commerce in China reported that the business outlook for the next two years in China has improved compared to last year, based on a survey of more than 300 member companies.
However, the fact that China is facing an economic slump and that competition with local companies is becoming more intense is a factor holding back global companies. As a result, voices are being raised that it will not be easy for international companies to be overly optimistic about the situation in China. Starbucks CEO Luxman Narasimhan said, “Sales in China have been hit as competitors have launched discount events due to the shrinking Chinese consumer sentiment. Chinese consumers are being very cautious.”
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