From Nasdaq, Inc.:

Some of the world’s top companies have made downbeat comments about Chinese demand, sparking worries about damage to firms exposed to China and Beijing’s ability to revive the economy. The scale of the challenge for companies selling everything from phones to cars and necklaces in the current climate is evident, as sales missed expectations.

These problems are derailing expectations for a strong post-pandemic rebound last year. Public sentiment is largely pessimistic and company CEOs admit that the road to recovery is long and tedious, especially for businesses highly reliant on the Chinese market. The lack of momentum has continued into 2024, and data shows sales in China of electrified vehicles fell 38.8% in January from the previous month. Cash-strapped consumers have also turned the tables on some of China’s own best-known brands.

U.S. and European companies have been hit by rising local players, and there may be a longer term shift underway in the Chinese consumer preference. The need to woo picky customers is evident, with Carlsberg pledging to increase sales and marketing spending by over 10% this year, with most of that dedicated to China and Vietnam. Competition for global players from local rivals is fierce, and there seems to be an emerging preference for domestic brands versus global brands from the Chinese consumer.

The current situation is a far cry from the growth story of the last couple of decades. Apple, in particular, faces stiff competition from local rivals at a time when some investors are re-evaluating their exposure to companies reliant on China. China’s stock markets have hit five-year lows in the run-up to the Lunar New Year holidays as waning confidence takes its toll on the country’s economy. The longer term economic outlook seems sluggish, prompting cash-strapped consumers in China to seek bargains from low-cost domestic e-commerce players.



Read more: ‘Long and tedious journey’: companies sour on China outlook