With China appearing to have largely brought the coronavirus under control and with consumer sentiment improving, the market is now highly attractive to foreign brands chasing business to replace falling demand elsewhere.
Many of the 400,000 executives expected to attend the current China International Import Expo in Shanghai, designed to boost foreign imports and help power domestic growth, are hoping the country, with its huge market size and rapid economic recovery, can pick up the slack from other major economies ravaged by the virus, Nikkei Asia reports.
And it adds that a reliance on China’s domestic growth suggests that it will remain a supply-chain hub, despite increasing calls to bring production back to home markets.
Decathlon China, for example, has indicated an intention to invest in apparel, accessories, sports tourism and to work with local partners. The French sports goods retailer predicts the sports market in will reach 4% of the overall domestic market within the next 15 years, an increase from just 1% today – making it the largest sports market in the world.
The company is not alone – a survey by HSBC of 1,100 companies across 11 major markets around the world found 75%, and 70% of US companies, are planning to expand supply chains in China over the next two years.
Commenting on the survey, Stuart Tait, HSBC’s Asia-Pacific head of commercial banking, said, “While other markets have become more competitive in areas such as labour costs, they are yet to reproduce the sophisticated ecosystem that has developed in the mainland.
“Because China’s consumer market is growing by the minute, more international companies are adopting an in-China-for-China strategy whereby they produce goods for Chinese consumers,” he said.
China’s state media outlet Xinhua also underlined the pull of China’s domestic market for foreign firms, reporting that a number of international brands, including Estee Lauder, Coca-Cola and Daimler, have shown stronger-than-expected quarterly growth in the Chinese market.
German car giant Daimler, for example, reported yearly sales growth in China of 24% and record unit sales for Mercedes-Benz in the quarter to September, while sales were down 8% globally.
Nor is it just the corporate giants who are chasing sales in China’s domestic market. Xinhua also noted that many businesses in smaller countries have also travelled to show their wares at the Expo. It highlights the popularity of civet coffee from Timor-Leste, quinoa, beef and alpaca products from Bolivia, and coffee, nuts and other local products from Kenya, Uganda, Tanzania and South Africa.
Sourced from Nikkei Asia, Xinhua; additional content by WARC staff