Beautiful Virgin Islands

Tuesday, Jun 03, 2025

US companies are still betting on Chinese consumers, despite coronavirus impact

US companies are still betting on Chinese consumers, despite coronavirus impact

A survey of 119 companies from March 13 to 18 by the Beijing-based American Chamber of Commerce in China found that the proportion of respondents saying they are experiencing significant revenue declines increased to 50%, up from 28% last month.

The consumer industry was among the most pessimistic about the disease’s impact on market growth this year, with 38% of businesses in the sector expecting a decrease of at least 50%,

But the consumer sector had the highest proportion of businesses saying they would maintain previously planned investments -at 46% -and 8% saying they would increase planned investments, the survey found.

American companies in China are still betting on the local consumer, even if business disruptions from the coronavirus are dragging down revenues.

A survey of 119 companies from March 13 to 18 by the Beijing-based American Chamber of Commerce in China found that the proportion of respondents saying they are experiencing significant revenue declines increased to 50% — that’s up from 28% last month.

“The consumer sector as we see in this survey has been particularly hard hit,” Alan Beebe, AmCham China president, said on a call with reporters Wednesday morning. ”(It’s) the sector that had one of the largest revenue disruptions.”

“On the other hand, it’s the sector, along with technology, where investment plans really haven’t changed,” he said. “The way I interpret that is, while they’re taking a hit short term, there’s no fundamental change in outlook.”

Officially called COVID-19, the highly contagious disease that emerged in late December in the Chinese city of Wuhan, has spread rapidly across the globe in the last few weeks. As of Wednesday, the virus has killed more than 16,000 people worldwide, with China accounting for over 3,200 of those deaths. Governments in countries from Italy to the United States have called for people to stay at home and for non-essential businesses to close.

The shutdowns have spurred fears of a global recession, sending financial markets worldwide churning.

Operating earnings per share for the S&P 500 are expected to grow just 0.2% this year, with that of consumer discretionary falling 1.3%, according to a March 20 note from Sam Stovall, chief investment strategist at CFRA.

Many companies, especially those in the consumer discretionary sector — which provide nonessential goods and services such as cars, apparel and entertainment — have mentioned “coronavirus” or “COVID-19″ on their quarterly earnings calls, according to analysis from FactSet, published March 20.

The report by Senior Earnings Analyst John Butters said that for the 213 companies in the S&P 500 that discussed those two terms, their average revenue exposure to China is 6%.

When the coronavirus first broke out in China, businesses were most concerned about disruptions to global supply chains and growth in the world’s second-largest economy. The acceleration of the outbreak overseas has shifted worries to global growth, even as China and its hundreds of millions of consumers get back to work.

“Now that we’re in a global pandemic situation, demand for our member companies’ products and services has changed significantly, somewhat for reasons of supply chain, but others, really just consumer demand,” Greg Gilligan, AmCham chairman, said on CNBC’s “Squawk Box Asia” Wednesday.

He said members are planning to cut costs, revise budgets and change projections for the year, but have not yet adjusted or reduced staff.

An increased proportion of respondents in March said demand for their products fell — 39% of firms versus 22% in February.

On the supply chain side, AmCham members were less affected by the relatively slower resumption of work for small and medium-sized firms. The survey found that nearly two-thirds of respondents said these smaller businesses accounted for no more than a quarter of their supply chain, while only 11% have a strong reliance.


Consumer businesses still planning to invest


The chamber’s annual business conditions survey late last year found the consumer sector was one of the industries more optimistic about their market opportunity in China for 2020, given the country’s large and growing middle class.

In last week’s flash survey of members, the consumer, as well as resources and industrial industries, were the most pessimistic about the virus’ impact on market growth this year, with 38% of firms in both industries expecting a decrease of at least 50%.

But the consumer sector had the highest proportion of businesses saying they would maintain previously planned investments — at 46%, while 8% said they would increase planned investments, the survey found.

The services sector was the only other industry to report businesses planning to increase investments, also at 8%, while the technology industry had the second-highest proportion of businesses maintaining investments — at 43%.

Foreign direct investment in China plunged 25.6% in February, bringing the total for the first two months of the year to 134.4 billion yuan ($19.2 billion), a decline of 8.6% year-over-year in yuan terms, according to China’s Ministry of Commerce.

For AmCham members overall, 40% said in the latest survey they would maintain previously planned levels of investment, up from 23% last month. Only 2% said they would consider exiting the Chinese market in the next three to five years, the March survey found.

“This indicates both patience and confidence that eventually business will return back to normal in China and this wouldn’t lead to any abrupt changes in long term strategy,” Beebe said.

Slightly more than a fifth of respondents are already back at work, with 13% expecting to resume normal operations by the end of this month, and 23% by the end of April, the survey found.

When it comes to government support, the top ask is tax alleviation, followed by consistency of policy and travel restrictions across different regions of China, according to the survey.

Based on the survey results, AmCham’s chairman Gilligan was also optimistic that pressure from the coronavirus would give China further impetus to follow through on reforms to the business environment.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
China Accuses US of Violating Trade Truce
Panama Port Owner Balances US-China Pressures
France Implements Nationwide Outdoor Smoking Ban to Protect Children
German Chancellor Merz Keeps Putin Guessing on Missile Strategy
Mandelson Criticizes UK's 'Fetish' for Abandoning EU Regulations
British Fishing Boat Owner Fined €30,000 by French Authorities
Dutch government falls as far-right leader Wilders quits coalition
Harvard Urges US to Unfreeze Funds for Public Health Research
Businessman Mauled by Lion at Luxury Namibian Lodge
Researchers Consider New Destinations Beyond the U.S.
53-Year-Old Doctor Claims Biological Age of 23
Trump Struggles to Secure Trade Deals With China and Europe
Russia to Return 6,000 Corpses Under Ukraine Prisoner Swap Deal
Microsoft Lays Off Hundreds More Amid Restructuring
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
×