US consumer giants are facing sales challenges in China, with many companies experiencing declines

From CNBC: 2024-08-06 19:22:40

Several U.S. companies are seeing a drag in earnings from the Chinese market due to slower growth, intense competition, and weak consumer sentiment. McDonald’s reported a 1.3% decline in sales for its international markets, which includes China. Chinese companies are also struggling, with retail sales growing by just 2% in June.

Procter and Gamble, Apple, Johnson and Johnson, General Mills, and Marriott are among the U.S. companies that echoed the downward trend in their China sales. Despite declining births in China, Procter and Gamble managed to grow baby care product sales by 6% and increase market share with a localization strategy. Marriott cut its revenue per room outlook due to expected weakness in Greater China.

Coca-Cola noted a drop in volumes in China, attributing it to a shift towards more profitable products like sparkling water, juice, and teas. Starbucks reported a 14% drop in same-store sales in China, while Chinese rival Luckin Coffee reported a 20.9% decline. Both companies face intensified competition in China, causing disruptions to their operating environments.

Canada Goose reported growth in Greater China sales, while athletic shoe brands like Nike and Adidas reported revenue growth in China. Nike had 7% revenue growth in Greater China, while Adidas reported 9% growth. Skechers also reported growth in China, with a positive outlook for the second half of the year.CEO Bjorn Gulden noted the fierce competition from local brands in China’s market.



Read more at CNBC:: U.S. consumer giants have one big sales problem: China