U.S. Companies Struggle with Sales in China
- Recent earnings reports indicate U.S. companies are struggling in the Chinese market.
- Companies like Starbucks and General Mills have reported slower sales, reflecting broader economic challenges.
- The ongoing difficulties in China highlight the complex relationship between U.S. firms and the Chinese economy.
BEIJING — A recent wave of earnings reports from U.S. companies highlights a significant downturn in consumer sentiment in China, impacting corporate earnings. General Mills CFO Kofi Bruce noted a "real souring" in the quarter ending May 26, following a strong start to the year. This trend is attributed to slower economic growth, heightened local competition, and ongoing tensions between the U.S. and China, which have also affected Chinese companies. Apple reported a 6.5% decline in Greater China sales for the quarter ending June 29, while Procter and Gamble's CFO indicated that a return to pre-COVID double-digit growth rates is unlikely. Other companies are also feeling the pinch; Starbucks experienced an 11% revenue drop in China, totaling $733.8 million, and Asia Pacific net operating revenue for another firm fell by 4% year-on-year to $1.51 billion. Conversely, some brands are still finding success in the region. Canada Goose reported a 12.3% increase in Greater China sales, while Nike and Adidas saw year-on-year growth of 7% and 9%, respectively. Adidas CEO Bjorn Gulden acknowledged the fierce competition from local brands, which are gaining market share with better pricing strategies. Despite the challenges, Skechers CFO John Vandemore expressed optimism, stating that he believes China is on the path to recovery.