LONDON – Some of the world’s top food, drinks and tech companies have struck a sour tone about Chinese demand, deepening investor worries about damage to firms exposed to the country and Beijing’s ability to revive the world’s second-biggest economy.
The downbeat comments from companies including Starbucks, Pandora and Carlsberg as they report fourth-quarter results come ahead of China’s Lunar New Year holiday, usually a busy period for consumer spending.
They highlight the scale of the challenge for companies selling everything from phones to cars and necklaces as Chinese consumers tighten their belts amid uncertain employment prospects, especially for younger people, a plunging stock market and declining property values.
Those problems derailed expectations for a strong post-pandemic rebound in 2023.
“I think it’s going to be a long and tedious journey,” in China, Pandora chief executive officer Alexander Lacik told Reuters on Feb 7, after its fourth-quarter sales missed expectations.
“People ask me why do you bother, it’s 2 per cent of your revenue base. That’s one way to look at it, but if you then say it’s 1.4 billion people, it’s the largest jewellery market in the world, then you get a different perspective,” he said.
Carlsberg chief executive Jacob Aarup-Andersen said he was “cautiously optimistic” the subdued conditions would stabilise over the year, which should also boost other economies in south-east Asia.
But he wouldn’t predict when a Chinese recovery would come.
The world’s leading industrial gases company, Linde was equally muted, saying a lack of momentum over the past year had continued into 2024.
“Our view is you will see continued mild recovery probably through the first half of the year, and then the second half, we’ll have to just watch and see what happens,” chief executive Sanjiv Lamba said.
Underscoring worries about the tepid start to 2024, data on Feb 7 showed sales in China of electrified vehicles fell 38.8 per cent in January from the previous month, the first such drop since August 2023.
In the run-up to the Lunar New Year holiday, China’s stock markets have hit five-year lows as the struggling economy and a lack of forceful government stimulus measures take their toll on confidence.