| HONG KONG/SHANGHAI, April 3
HONG KONG/SHANGHAI, April 3 Official numbers may
suggest a rosier 2017 for China, but the bottom lines of the
country's top consumer firms - from brewers to noodle makers and
cinema chains - paint a patchy picture of spending in the
world's second-largest economy.
Tsingtao Brewery Co Ltd, China's number two
brewer, posted its steepest drop in net profit in 20 years last
week, blaming tough competition and weak demand. Noodle maker
Tingyi saw profits drop by a third.
China's top cinema operator Wanda Cinema Line
saw 2016 profits rise 15.2 percent - down from growth of nearly
50 percent the year before, as broader box office sales stalled.
IMAX China's profit tumbled, too.
"There's still a tonne of room for growth, but these markets
are much more competitive now and even bigger brands are
starting to struggle," said Ben Cavender, Shanghai-based
principal at China Market Research Group.
"Consumers are becoming more cagey about how they're
spending their money, (from) food to clothing and movies."
Increased caution - and sophistication - will push companies
to innovate, and to spend more to fend off competitors, if they
are to survive, analysts said.
After growing at the slowest pace in 26 years in 2016,
official data have indicated a strong start to the economy this
year, supported by bank lending, a government infrastructure
spree and a much-needed resurgence in private investment.
But China's consumption trends have been less clear.
Retail sales in December rose at their fastest pace in a
year, thanks to cars and cosmetics, but they disappointed in the
first two months of this year.
Consumption contributed the bulk of China's growth last year
at nearly 65 percent, but income growth didn't pick up, and a
measure of China's income inequality rose slightly last year.
A private business survey last month showed growth in the
services sector slowed to a four-month low as increasing
competition made it harder for companies to pass higher input
costs on to consumers.
To be sure, the picture from recent earnings reports is not
comprehensive nor uniform.
But the drop in profits of some of China's best-known names
flags the uneven nature of the country's gradual shift to a
consumer-driven economy, and the challenge for both brands and
Beijing, which needs to stoke domestic consumption and private
investment to fuel growth.
Of course there were bright spots.
In areas like sports apparel, firms such as Li Ning Co Ltd
and ANTA Sports predicted a boost as China
looks to build its sports industry and consumers become
increasingly health conscious. Li Ning's profits rose sharply.
But global uncertainties - from the impact of trade policies
under new U.S. President Donald Trump to political uncertainty
in Europe - are expected to cloud the year.
"In 2017, great uncertainties in the economic outlook remain
in view of the changes in political and economic policies in
some key regions," China Resources Beer said.
The brewer reported sluggish sales growth, but also its
first annual profit in three years this month.
Retailers also reported a mixed outlook, although a slowdown
in e-commerce was creating opportunities elsewhere.
White goods maker Qingdao Haier, which posted
annual net profit growth of 3.1 percent, said China was in a new
normal of consumer growth - but expects sales to eventually
accelerate with rising salaries and demand for high-tech homes.
Others bore the cost of change: home appliance retailer GOME
posted a 73 percent drop in full-year profit as it
spent on a strategic shake-up.
"Looking into 2017, it is expected that (the Chinese) and
global economy will continue to face downward pressure, leading
to sluggish market demand," said Chairman Li Dongsheng of
television maker TCL Multimedia.
(Reporting by Adam Jourdan in SHANGHAI and Donny Kwok in HONG
KONG; Editing by Kim Coghill)