Foreign consumer brands like Ikea and Adidas have resumed full operations in China as the retail sector quickly rebounds after the COVID-19 outbreak ebbs. Analysts said that China would become a safe haven for foreign brands.
Swedish home furnishing company Ikea told the Global Times on Thursday that all of its stores in China have fully resumed operations, saying “we’re happy our business is returning to normal.”
Ikea said it’s sticking to its Future-plus strategy in China to develop a comprehensive sales channel that integrates online and offline segments. The company has five new outlets under construction in the market, and its official app was rolled out after it opened a store on Chinese e-commerce platform Tmall in March.
“China is one of the most important markets for Ikea… We have great confidence in the market and promise to adhere to our Future-plus strategy in a bid to create a brand-new Ikea for Chinese consumers,” the company said.
After a string of temporary closings that began in early February, German sportswear brand Adidas announced that all of its own- and partner-operated stores in China have been open since mid-April, in stark contrast to an opening rate “significantly below 50 percent” in North America and Latin America.
Adidas said that it expects sales in greater China for the second quarter to be near the year-earlier level. Overall revenue growth in the market turned positive in May, thanks to an increase in conversion rates and exceptional growth in e-commerce.
US coffee shop chain Starbucks Coffee Co told the Global Times that 99 percent of its stores in China have resumed operations, except those located at transportation hubs and cinemas that “have to remain closed.”
Since a gradual business recovery in the second half of February, Starbucks’ sales have continued to improve. As of the end of May, Starbucks had 4,400 stores in the Chinese market.
“It seems to have been a trend for foreign consumer brands to shift their focus to China, which has become a safe haven for overseas capital and a key market for their revenue growth,” Liu Dingding, a Beijing-based independent analyst, told the Global Times on Thursday.
According to a survey by US-based commercial real estate firm CBRE Group, 40 percent of the retail tenants in the Chinese mainland predicted that their sales would recover to pre-epidemic levels by the end of 2020.
Wei Jianguo, former vice commerce minister, told the Global Times that China is expected to exceed the US to become the largest consumption market in 2020. “Domestic retail sales are expected to reach 45 trillion yuan ($6.4 trillion) in 2020, up 8 percent year-on-year, with new types of consumption and services consumption predicted to be robust,” he said.
Bucking fears of slow economic growth in China due to the impact of the global pandemic, foreign brands are still betting on the market for future growth.
For example, Canadian coffee-and-doughnut chain Tim Hortons said on its social media account that it received an investment from Chinese technology giant Tencent Group. It laid out a plan to expand its stores from the current 50 to 1,500 in the Chinese market.
File photo shows an IKEA store in Beijing. Photo: Xinhua
