China Boosts US Companies Revenue In Several Sectors
On Wednesday, the U.S. recorded more than 102,800 new cases of Covid-19( Germany, France and the U.K. all issued new restrictions ). With the threat of Europe and the US facing tighter restrictions and hence less consumer spending its the Chinese consumers who are lifting up our brands.
Business and consumer activity inside China has returned to pre-pandemic patterns in many ways. Chinese retail sales grew in August for the first time in 2020, increasing 0.5% year-over-year. September retail sales grew 3.3% year-over-year.
China is also buying more U.S. grain, meat and other farm goods. Archer Daniels Midland Co. and Bunge Ltd. both said higher commodities exports helped rising profits during their most recent quarters. “China has come roaring back from the pandemic,” said Juan Luciano, chief executive of ADM, on a conference call last week. “Their recovery has surprised everybody.”
Chinese consumers are “more or less back to where they were” Coke’s finance chief, John Murphy, said in an interview in October. “They have managed from March through June to contain and pretty much eliminate the pandemic.”
Coca-Cola said it expects to see growth this year in China. Coke reported revenue of $8.65 billion in the third quarter, a decline of 9% from a year earlier. The company’s case volume fell in the quarter by 6% in North America and 4% globally.
“This was another extraordinary quarter for Chinese consumer consumption,” (China sales increased 28% to 30%) Estee Lauder Chief Executive Fabrizio Freda said on the company’s quarterly earnings call on Monday.
L’Oreal SA reported a similar surge in demand: Its China sales increased 28% in the third quarter year-over-year, although its global sales fell 2%.
Cummins Inc. which makes truck engines, said its China revenue surged 46% year-over-year in the third quarter based on local government spending as part of a infrastructure programs being rolled out nationally, whereas its global revenue dropped 11%. Chinese “demand has been at record levels for the last six months,” said Chief Financial Officer Mark Smith.
Daimler AG reported 24% yearly sales growth, and record unit sales, for Mercedes-Benz in the September quarter. That compared with an 8% decline globally.
GM reported a 12% yearly increase in China sales in the September quarter, compared with a 10% decline in U.S. sales.
At Ford Motor Co. , China sales increased 22% year-over-year but declined 5% globally.
American companies’ increasing reliance on growth in China brings risks, particularly in light of acrimony between the two nations. Just this week, Chinese regulators halted financial-technology firm Ant Group Co.’s plans to go public in what would have been the world’s largest listing.
“The business community is looking for certainty and predictability,” said Matthew Margulies, vice president at the U.S.-China Business Council in Beijing, a quarter of whose members postponed planned investments in China over the past year, mainly because of the pandemic and worsening U.S.-China relations. “There’s been a lot of volatility in the bilateral relationship, which makes long-term planning difficult.”
U.S.-China trade tensions will persist whoever secures the presidency, said Bala Ramasamy, professor of economics at the China Europe International Business School in Shanghai. “The U.S. will continue to demand that China opens up its market to American goods and services as well as a more level playing field for American companies,” he said.