American companies in several industries are banking on increased post-pandemic consumer demand from China.
A report Sunday (Feb. 26) by The Wall Street Journal (WSJ) cites a number of examples of this trend, including Starbucks and McDonald’s opening new locations,
“I remain more confident than ever that we are still only in the early chapters of our growth story in China,” Howard Schultz, Starbucks’s interim chief executive, said earlier this month, per the WSJ report.
The report notes that there are a number of obstacles facing American companies that hope to cash in on the China market, such as deteriorating relations between Washington and Beijing over issues like China’s balloon flights through U.S. airspace and the Russia-Ukraine war.
There’s also heavier scrutiny in the U.S. over American companies doing business in China, with lawmakers trying to limit their activities.
In addition to companies like McDonald’s and Starbcucks, there are also a number of high-end retailers hoping to cash in on China’s robust luxury market, WSJ said.
Recent reporting by PYMNTS has shown a number of examples of this trend. Ralph Lauren — one of the retailers mentioned by WSJ — said recently it planned to open 55 locations during this quarter, most of them in China.
And last month, LVMH Chairman and CEO Bernard Arnault said that the reopening of China will offer new opportunities to luxury brands that had already enjoyed a record year.
“We have every reason to be confident — indeed optimistic — on the Chinese market,” Arnault said during an earnings webcast. “In Macau, where the Chinese can now travel to, the change is quite spectacular. The stores are full and it’s really come back at a very strong pace.”
China lifted its international travel restrictions in January after three years of pandemic-related limits. Luxury retailers welcomed the change, as Chinese shoppers purchased about a third of luxury goods worldwide in the pre-pandemic year 2018.
As PYMNTS reported last year, China’s ongoing struggles with the COVID pandemic led to negative fallout for global brands such as Apple and Starbucks, as protests over the country’s “zero-COVID” policies and lockdown restrictions threatened supply chains.
In Apple’s case, that meant production cutbacks for its iPhone 14 Pro and iPhone 14 Pro Max models. For Starbucks, the pandemic brought a reduction of in-store traffic.
“We anticipate the current COVID-related uncertainty to continue … while our long-term aspirations for China remain undiminished, we expect the recovery of our business in the country to be nonlinear,” Schultz said.
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