Instead, it will “do whatever we can to double down and accelerate the growth.” Rorsted said on a call with analysts that the company is not planning to slash costs or pull back from the country. The company said it now expects China revenue to “decline significantly” and that a sudden rebound is unlikely.įor now, Adidas remains undeterred. Then the music stopped.Īfter initially projecting that sales in China would accelerate this year, Adidas ratcheted down expectations in May as COVID lockdowns continued to spread. It went from 9,000 stores in China in 2015 to its current 12,000, though only 500 are operated by Adidas. In 2016, when China was its fastest growing and most profitable market, Kasper Rorsted, the chief executive at Adidas, declared that the country was “the star of the company.” Adidas invested aggressively to expand its foothold. “It’s very depressing to go from enjoying life to subsistence.” “Because I’m worried about being laid off, I transfer everything to my mother every month,” Fang said. She hands the rest to her mother, who puts the money in the bank. (Matthew Abbott/The New York Times)Įven though she is employed again, working in advertising in Beijing, she now allocates a quarter of her salary on food, transportation and other living costs. The company sells many of its high-end mattresses in China. Beard, a 123-year-old, family-owned mattress manufacturer in Padstow, Australia, on July 21, 2022. In the past, she spent most of her salary on brands like Michael Kors, Coach and Valentino during frequent shopping trips.
But the pandemic has rattled the confidence of many shoppers who now see rainy days ahead.įang Wei, 34, said she has scaled back her spending since she left a job in 2020. A booming construction market fueled demand for iron ore from Australia and Brazil.Ĭhinese consumers rewarded those investments by opening their wallets. German car manufacturers opened dealerships, and South Korean and Japanese chip firms courted Chinese electronics makers. food and consumer goods companies jostled for supermarket shelf space. (Matthew Abbott/The New York Times)Īfter the 2008 financial crisis when the rest of the world retrenched, China emerged as an outlier and international businesses rushed in.Įuropean luxury brands erected gleaming stores in China’s biggest cities, while U.S. “But there’s always a degree of risk.” Fabric is embroidered at A.H. “The economy still has growth potential,” he said. Pearson said he is hoping that the Chinese Communist Party congress later this year will clarify “the trajectory for China” and imbue consumers with more confidence. Other worrying signs have emerged, including a housing slump. The cost of mattress materials and components, such as latex and natural fibers, have increased significantly. Since then, the cost of shipping a container has jumped sixfold. China became the best-selling market for its top-of-the-line $75,000 mattress. And like any high-end brand, it rolled out products with prices that defy belief. Beard opened its flagship store with a local partner in Shanghai almost 10 years ago. China’s pandemic response of quarantines and lockdowns has kept customers at home and out of stores.Ī.H. COVID-19 has snarled the flow of goods, lifting the prices of almost everything and delaying shipments by months. Geopolitical tensions and a U.S.-China trade war have unleashed punishing tariffs for some industries. Workers at Kamps Hardwoods, a Michigan-based manufacturer of kiln-treated lumber used for homes and furniture, in Dutton, Mich., on July 20, 2022.
So far, most companies are staying the course, but there is a steady whiff of caution that did not exist just a few years ago. “I certainly don’t see China returning to the rates of growth that we had seen previously,” said Tony Pearson, chief executive of A.H. Now, the once resilient Chinese economy is looking shaky, and the companies that flocked to the country to partake in boom times are being confronted by a sobering reality: flat growth in what was once seen as a reliable economic opportunity. Unemployment is high, the housing market is in crisis and nervous consumers - living under the constant threat of lockdowns and mass testing - are not spending. This month, Chinese officials announced that the economy grew at its slowest pace since the early days of the pandemic. FILE Ñ An Adidas store at a shopping mall in Beijing on Feb.
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