Pleasing the China consumer has always been a challenge, but – as Tsingtao and Wanda discovered – consumers have become harder to get. Retail expert Ben Cavender nevertheless sees a lot of room for growth, he tells Reuters.
Official numbers may suggest a rosier 2017 for China, but the bottom lines of the country’s top consumer firms – from brewers to noodle makers and cinema chains – paint a patchy picture of spending in the world’s second-largest economy.
Tsingtao Brewery Co Ltd, China’s number two brewer, posted its steepest drop in net profit in 20 years last week, blaming tough competition and weak demand. Noodle maker Tingyi saw profits drop by a third.
China’s top cinema operator Wanda Cinema Line saw 2016 profits rise 15.2 per cent – down from growth of nearly 50 per cent the year before, as broader box office sales stalled. Imax China’s profit tumbled, too.
“There’s still a tonne of room for growth, but these markets are much more competitive now and even bigger brands are starting to struggle,” said Ben Cavender, Shanghai-based principal at China Market Research Group.
“Consumers are becoming more cagey about how they’re spending their money, (from) food to clothing and movies.”
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