Pictured
here
is
a
McDonald’s
store
in
Yichang,
Hubei
province,
China,
on
July
30,
2024.
Nurphoto
|
Nurphoto
|
Getty
Images
BEIJING
—
A
theme
emerging
in
the
latest
slew
of
U.S.
companies’
earnings
reports
is
a
drag
from
the
China
market.
The
Chinese
economy
—
home
to
more
than
four
times
the
population
of
the
U.S.
—
has
attracted
multinational
corporations
for
decades
given
its
large,
fast-growing
market.
But
slower
growth
and
intense
local
competition,
amid
tensions
with
the
U.S.,
are
now
weighing
on
corporate
earnings.
“Consumer
sentiment
in
China
is
quite
weak,”
McDonald’s
chairman,
CEO
and
director
Christopher
Kempczinski,
said
of
the
quarter
ended
June
30.
“You’re
seeing
both
in
our
industry
and
across
a
broad
range
of
consumer
industries,
the
consumer
being
very,
very
much
deals
seeking,”
he
added.
“In
fact,
we’re
seeing
a
lot
of
switching
behavior
in
terms
of
just
consumers,
whatever
is
the
best
deal,
that’s
where
they
end
up
going.”
McDonald’s
said
sales
for
its
international
developmental
licensed
markets
segment
declined
1.3%
from
a
year
ago.
The
unit
includes
China,
for
which
the
company
indicated
sales
declined
but
did
not
specify
by
how
much.
watch
now
Chinese
companies
have
also
struggled.
Nationwide
retail
sales
grew
by
just
2%
in
June
from
a
year
ago.
In
the
mainland
China
stock
market,
known
as
A
shares,
earnings
likely
hit
a
bottom
in
the
first
quarter
and
may
“pick
up
mildly”
in
the
second
half
of
the
year,
Lei
Meng,
China
equity
strategist
at
UBS
Securities,
said
in
a
July
23
note.
Several
U.S.
consumer
giants
echoed
the
downward
trend
in
their
latest
earnings
reports.
Apple
said
Greater
China
sales
fell
by
6.5%
year-on-year
in
the
quarter
ended
June
29.
Johnson
and
Johnson
said
China
is
a
“very
volatile
market”
and
a
major
business
segment
that’s
performed
below
expectations.
After
a
“strong
start”
to
the
year,
General
Mills
CFO
Kofi
Bruce
said
the
quarter
ending
May
26
“saw
a
real
souring
or
downturn
in
consumer
sentiment,”
hitting
Haagen-Dazs
store
traffic
and
the
company’s
“premium
dumpling
business.”
General
Mills
owns
the
Wanchai
Ferry
dumpling
brand.
The
company’s
China
organic
net
sales
fell
by
double
digits
during
the
quarter.
We
don’t
expect
the
return
to
the
growth
rates
that
we
saw
pre-Covid.Andre
SchultenP&G
CFO
The
regional
results
are
also
affecting
longer-term
corporate
outlooks.
In
China,
“we
don’t
expect
the
return
to
the
[double-digit]
growth
rates
that
we
saw
pre-Covid,”
Procter
and
Gamble
CFO
Andre
Schulten
said
on
an
earnings
call
last
week.
He
expected
that
over
time,
China
would
improve
to
mid-single-digit
growth,
similar
to
that
in
developed
markets.
Procter
and
Gamble
said
China
sales
for
the
quarter
ending
late
June
fell
by
9%.
Despite
declining
births
in
China,
Schulten
said
the
company
was
able
to
grow
baby
care
product
sales
by
6%
and
increase
market
share
thanks
to
a
localization
strategy.
Hotel
operator
Marriott
International
cut
its
revenue
per
available
room
(RevPAR)
outlook
for
the
year
to
3%
to
4%
growth,
due
largely
to
expectations
that
Greater
China
will
remain
weak,
as
well
as
softer
performance
in
the
U.S.
and
Canada.
Marriott’s
RevPAR
Greater
China
fell
by
about
4%
in
the
quarter
ended
June
30,
partly
affected
by
Chinese
people
choosing
to
travel
abroad
on
top
of
a
weaker-than-expected
domestic
recovery.
However,
the
company
noted
it
signed
a
record
number
of
projects
in
the
first
half
of
the
year
in
China.
McDonald’s
also
affirmed
its
goal
to
open
1,000
new
stores
in
China
a
year.
Domino’s
said
its
China
operator,
DPC
Dash,
aims
to
have
1,000
stores
in
the
country
by
the
end
of
the
year.
Last
week,
DPC
Dash
said
it
had
just
over
900
stores
as
of
the
end
of
June,
and
that
it
expects
first-half
revenue
growth
of
at
least
45%
to
2
billion
yuan
($280
million).
Local
competition
Coca-Cola
noted
“subdued”
consumer
confidence
in
China,
where
volumes
fell
in
contrast
to
growth
in
Southeast
Asia,
Japan
and
South
Korea.
Asia
Pacific
net
operating
revenue
fell
by
4%
year-on-year
to
$1.51
billion
in
the
quarter
ended
June
28.
“There’s
a
general
macro
softness
as
the
overall
economy
works
through
some
of
the
structural
issues
around
real
estate,
pricing,
etc.,”
Coca-Cola
Chairman
and
CEO
James
Quincey
said
on
an
earnings
call.
But
he
attributed
the
drop
in
China
volumes
“entirely”
to
the
company’s
shift
from
unprofitable
water
products
in
the
country
toward
sparkling
water,
juice
and
teas.
“I
think
the
sparkling
volume
was
slightly
positive
in
China,”
Quincey
said.
Having
to
adapt
to
a
new
mix
of
products
and
promotions
was
a
common
occurrence
in
U.S.
companies’
earnings
calls.
“We’ve
continued
to
face
a
more
cautious
consumer
spending
and
intensified
competition
in
the
past
year,”
Starbucks
CEO
Laxman
Narasimhan
said
on
an
earnings
call.
“Unprecedented
store
expansion
and
a
mass
segment
price
war
at
the
expense
of
comp
and
profitability
have
also
caused
significant
disruption
to
the
operating
environment.”
Starbucks
reported
China
same-store
sales
dropped
by
14%
in
the
quarter
ended
June
30,
far
steeper
than
the
2%
decline
in
the
U.S.
Chinese
rival
Luckin
Coffee,
whose
drinks
can
cost
half
the
price
of
one
at
Starbucks,
reported
a
20.9%
drop
in
same-store
sales
for
the
quarter
ended
June
30.
But
the
company
claimed
sales
for
those
stores
surged
by
nearly
40%
to
the
equivalent
of
$863.7
million.
Luckin
has
more
than
13,000
self-operated
stores,
primarily
in
China.
Starbucks
said
its
7,306
stores
in
China
saw
revenue
drop
by
11%
to
$733.8
million
during
the
same
quarter.
Both
companies
face
many
competitors
in
China,
from
Cotti
Coffee
on
the
lower
end
to
Peet’s
on
the
higher
end.
The
only
public
disclosures
regarding
Peet’s
China
business
described
it
as
“strong
double-digit
organic
sales
growth”
in
the
first
half
of
the
year.
Bright
spots
Not
all
major
consumer
brands
have
reported
such
difficulties.
Canada
Goose
reported
Greater
China
sales
grew
by
12.3%
to
21.9
million
Canadian
dollars
($15.8
million)
in
the
quarter
ended
June
30.
Athletic
shoe
brands
also
reported
growth
in
China,
while
warning
of
slowdown
ahead.
Nike
reported
7%
year-on-year
growth
in
Greater
China
revenue
—
nearly
15%
of
its
business
—
for
the
quarter
ended
May
31.
“While
our
outlook
for
the
near
term
has
softened,
we
remain
confident
in
Nike’s
competitive
position
in
China
in
the
long
term,”
said
Matthew
Friend,
CFO
and
executive
vice
president
of
the
company.
Adidas
reported
9%
growth
in
Greater
China
revenue
for
the
quarter
ended
June
30.
The
region
accounts
for
about
14%
of
the
company’s
total
net
revenue.
CEO
Bjorn
Gulden
said
on
an
earnings
call
that
Adidas
was
taking
market
share
in
China
every
month,
but
local
brands
posed
fierce
competition.
“Many
of
them
are
manufacturers
that
go
then
straight
to
retail
with
their
own
stores,”
he
said.
“So
the
speed
they
have
and
the
price
value
they
have
for
that
consumer
was
different
than
it
was
earlier.
And
we
are
trying
to
adjust
to
that.”
Skechers
reported
3.4%
year-on-year
growth
in
China
in
the
three
months
ended
June
30.
“We
continue
to
think
China
is
on
the
road
to
recovery,”
Skechers
CFO
John
Vandemore
said
on
an
earnings
call.
“We
expect
a
better
second
half
of
the
year
than
what
we’ve
seen
thus
far,
but
we
are
watching
things
carefully.”
—
CNBC’s
Robert
Hum
and
Sonia
Heng
contributed
to
this
report.