Last night, China printed 48.3 on the HSBC Flash PMI, but don't tell U.S. corporations who call China a major market that China is slowing.

china map flagLuxury sales are alive and well, auto sales are alive and well...and even Yum (YUM, quote) saw a turn in its volatile China data series. If you ask Jeff Immelt at General Electric (GE, quote), China remains one of his top markets and he has seen zero falloff in the order book, in fact his China order book is growing.  In fact, most CEOs shake their hands in disbelief when asked why people think China is a problem for them.

Tonight Apple (AAPL, quote) and tomorrow Amazon (AMZN, quote), Starbucks (SBUX, quote) and General Motors (GM, quote) will give additional insight into China sales which we expect will be solid. GM has already indicated China sales were soaring and now over 40% of sales globally. 

So far some earnings season China highlights include: 

  • Nike (NKE, quote) has seen China revs go from 8.22% of sales in fiscal Q1 '14 to 10% of sales in fiscal Q3 '14.  
  • McDonalds (MCD, quote) said China sales were +6.6% and a nice offset to slower U.S. growth.  They plan to overhaul all of their China stores.  
  • Yum last night said China sales (53% of sales) recovered to +9% y/y. 
  • Coca-Cola (KO, quote) , who is under pressure in North America from declining CSD sales, said China sales last quarter were +12% while global sales only 2%. 
  • Boeing (BA, quote) earnings were out today and China's Shandong Airlines just announced a $4.6Bn order that is indicative of the demand the company is seeing form Chinese customers. 
  • United Technologies (UTX, quote) is seeing strong demand from Chinese housing and infrastructure segments. 

The list goes on and on…

China macro headlines should not be accused with a reversal in the generational transition to a consumption economy.  Cyclicality should not be confused with regression for U.S. companies who need Chinese growth at the center of their global growth strategies.  These are not strategies that were built overnight nor will they be challenged by the macro headlines that seem to confuse so many investors who have not made the same commitment.

Tagged with:
 

Leave a Reply