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In Chinese astrology, rabbits are the luckiest of the 12 animals, and corporate America is hoping that with any luck a Chinese economic rebound in the Year of the Rabbit can help them withstand a potential slump at home.
US businesses, mostly consumer-facing ones, are getting even more bullish on China now that its “zero COVID” policy is a thing of the past, The Wall Street Journal reported Sunday.
West Goes East
Political and economic tensions between Washington DC and Beijing are high. China is standing strong in its support for Vladamir Putin’s invasion of Ukraine, and is even considering shipping lethal weapons: America doesn’t like that. The US is ramping up its microchip and electric vehicle production to compete with the Middle Kingdom: China doesn’t like that. Both nations have begun to blacklist a handful of each other’s respective companies. We haven’t even mentioned balloons. Corporate America, however, does what it wants unless Washington tells it not to.
For roughly three years, China maintained its draconian zero COVID policy. Whereas most countries facing less severe variants took a “let’s learn to live with it” approach, China pushed on, closing down air travel, enforcing strict lockdowns, and hosting one of the most frustrating winter Olympics in history. But the economy started to tank and protests filled the streets, so at the end of 2022, China ditched the safety measures and essentially reopened the world’s second-largest consumer market.
US companies that continued to invest in China throughout the pandemic despite losses now see a reward on the horizon:
- Last year, McDonald’s opened 700 stores in China, and plans to open another 900 in 2023. Starbucks intends to get 3,000 new locations up and running by 2025. Both companies saw dips in year-over-year sales in 2022, which they attributed to COVID lockdown restrictions.
- Retailer Tapestry has $325 million set aside for capital and software spending, and roughly half will go to new stores and renovations in China, the WSJ reported. At the start of the month, CEO Joanne Crevoisera said China is fertile ground for long-term investments.
Disney is also having a field day now that China has lifted its three-year ban on Marvel films. While Chinese regulators never explained why the movies were prohibited in the first place, there were multiple theories: the ongoing trade war with the US, the presence of LGBTQ+ characters, and Eternals director and Chinese native Chloé Zhao criticizing the nation.
Russian Expansion: Meanwhile in Russia, Corporate China is making headway. With plenty of international companies scaling back or completely leaving Russia, China is filling in some of the gaps, CNN reported. The iPhone and Galaxy have been replaced by the Xiaomi and Realme. Forget Hyundai and Kia. Now the Russian auto market is all about Chery and Great Wall.