Luo Yunfei/China News Service/VCG/Getty Images
- Chinese consumers are back traveling and spending following the lifting of COVID-19 curbs.
- Retail sales in China rose 10.6% in March from a year ago.
- This pent-up demand has helped US companies' earnings as consumption slows at home.
China's big spenders are back, and American companies are cashing in on this post-COVID bounce.
The pent-up demand in the world's second-largest economy comes after nearly three years of strict COVID-19 restrictions — which Beijing reversed course on late last year.
As people in China get out of their homes to travel and spend, retail sales have improved in China, rising almost 11% year-on-year in March.
It contrasts with a mere 2.9% year-on-year rise in American retail sales in March.
One reason for this slow retail sales could be the persistently high inflation — the US Consumer Price Index, an inflation gauge, rose 5% in the same month.
In comparison, China's core inflation rose just 0.7% in March from a year ago, according to official data from Beijing.
All this means American companies facing a slowdown in US consumption are getting a boost from Chinese demand.
Here are five American companies that have benefited from China's economic recovery.
1. A strong Asia Pacific performance helped prop up Airbnb's bookings.
Airbnb reported a 20% year-on-year jump in revenues for the first quarter of the year to $1.8 billion, as a record high 120 million nights of stay and experiences were booked during the period, the company said in its earnings report on May 9.
Most strikingly, the home-sharing platform posted a 48% growth in nights and experiences booked in the first quarter of the year in Asia Pacific — the highest among all markets. Booking rates for nights and experiences grew 19% across all markets.
In particular, demand from Chinese travelers helped lift Airbnb's earnings for the quarter. While Airbnb shut its domestic business in China in 2022, the platform continues to cater to Chinese travelers overseas.
"We are encouraged by China's recent lifting of its travel restrictions even though we anticipate the outbound recovery to be gradual due to challenges with limited flight capacities," Airbnb said in its first-quarter letter to shareholders on May 9.
2. Starbucks sales in China rose 3% — reversing a sharp 29% quarterly decline.
Starbucks reported better-than-expected profits for its latest fiscal quarter ended in March, thanks to a strong demand recovery in China.
The Seattle-headquartered coffee chain posted a 3% rise in same-store sales in China in its fiscal quarter — reversing a sharp 29% decline in the previous quarter.
The robust Chinese demand pulled up Starbucks' international sales in the second quarter of 2023 — global sales grew by 7% year-on-year, more than double analysts' expectations, per Refinitiv data.
The recent quarter's recovery stands in contrast to the uncertainty Starbucks faced in May 2022 amid China's on-off lockdowns. At the time, the company had suspended its guidance for the rest of the year due to the COVID-19 restrictions.
Then CEO Howard Schultz had said at an investor call last year: "I remain convinced Starbucks' business in China will be eventually larger than our business in the U.S."
3. Disney's theme park profits benefited from the lifting of Shanghai and Hong Kong pandemic restrictions.
With two theme parks in the Chinese city of Shanghai and the special administrative territory of Hong Kong, Disney's recent results got a lift from the loosened COVID-19 restrictions.
In the second fiscal quarter that ended in March, the company's global theme park division posted a 17% year-on-year increase in revenues to $7.8 billion. The division's operating profits surged 23% to $2.2 billion compared to a year ago.
And Disney attributed the growth to growth at its Shanghai, Hong Kong, and Paris theme parks.
Disney's earnings from its Shanghai theme park were "incredibly positive" for the second quarter, said Bob Iger, Disney's CEO in a May 10 earnings call, according to a transcript.
"We've been really gratified to see the bounce back from the pandemic closures that we had," added Iger.
4. MGM Resorts rebounds as tourism returns to Macau, a gaming hub.
US casino giant MGM Resorts International beat Wall Street estimates in the first quarter of 2023 — in part due to the improved business in Macau, a gaming hub.
"MGM Resorts is executing across all of its geographies and channels," said Bill Hornbuckle, MGM Resorts' CEO in a May 1 press release. He added the MGM China division posted a "swift return to profitability."
Macau, a special administrative region of China, saw nearly 5 million visitors in the first three months of 2023, according to official statistics — this is almost 90% of the territory's full-year arrivals in 2022.
MGM China posted adjusted earnings of $169 million in the first quarter from a year ago — which was almost 90% of the China division's adjusted earnings in the first quarter of 2019.
Net revenues for the MGM China division were also 130% higher from a year ago "amid strong reopening trends," MGM said in its earnings release.
5. Coty's earnings were boosted by China's duty-free shopping spree.
New York-based beauty giant Coty reported better-than-expected fiscal third-quarter revenues of $1.3 billion, thanks to a boost in its travel retail business after China's reopening. Analysts were expecting revenues to come in at $1.2
Coty's earnings were helped by tourists picking up products at duty-free shops in airports and major shopping zones like Hainan island in the south of China, according to company executives.
And while the company's 13% growth in the US markets overshadowed the growth in the Asia Pacific region, company executives have flagged China as a big demand driver.
"China has been very active for Coty during this quarter," said Sue Nabi, Coty's CEO in a May 9 earnings call.
Nabi also pointed to further encouraging signs coming from the Asia giant.
"April sales in China, including Hainan, had increased both versus last year and versus 2 years ago, speaking to the strong signs of recovery in the market," she added in the call.