US firms cashing in on China's shift to consumer economy

Beauty And The Beast stars Emma Watson and Dan Stevens at the movie's Shanghai premiere on Feb 27. The film has fuelled Chinese demand for related merchandise in Shanghai Disneyland.
Beauty And The Beast stars Emma Watson and Dan Stevens at the movie's Shanghai premiere on Feb 27. The film has fuelled Chinese demand for related merchandise in Shanghai Disneyland.PHOTO: REUTERS

Businesses explore new growth points as country relies less on industrial sector

SHANGHAI • In addition to 600 million yuan (S$122 million) in box- office sales in China so far, Hollywood blockbuster Beauty And The Beast has given rise to countless hot-selling products.

Beast-themed puppets and teacups often sell out at Shanghai Disneyland, and the 30-plus types of desserts based on the movie have become top choices for its fans at Shanghai Disneyland Hotel.

Ms Tina Dai, a merchandise team member at Shanghai Disney Resort, said the resort is planning to restock the ceramic teacups, based on one of the movie characters, which sell for 85 yuan each.

"The popularity of movie-based products shows consumers' keen interest in Disney characters and movie stories," she said.

While China is shifting its growth engine from the industrial to the service sector, US companies are exploring new growth points. Statistics show China-US service trade exceeded US$100 million (S$140 million) last year.

Global coffee chain Starbucks is among the beneficiaries of the huge Chinese market. The corporation's fiscal report released in late January showed comparable store sales increased 6 per cent in China, 3 percentage points higher than global growth for the quarter that ended on Jan 1. Net quarterly revenues for the China/Asia-Pacific segment grew 18 per cent year-on- year to US$770.8 million.

The robust sales growth is partly due to cooperation between Starbucks and Chinese Internet giant Tencent, which has offered mobile payment services for Chinese customers since December. The two firms have also rolled out a digital gift-giving service on WeChat, allowing users to send and receive Starbucks digital gifts and then cash them in at offline outlets.

While China is developing a consumption-driven economy, many sectors such as logistic services will improve to better serve Chinese consumers, business professor David Bell from the Wharton School of the University of Pennsylvania said while visiting Shanghai Jiaotong University last month.

Last year, Amazon China launched a Prime service offering free shipping to its paid members.

Amazon China president Zhang Wenyi said the number of active users in China as of the end of last year was 23 times the number in 2014, and more and more Chinese sellers are seeking fortunes in the overseas market via Amazon.

"We have seen huge market potential with more and more Chinese customers buying from around the world on e-commerce platforms, and more and more American customers choosing quality products made in China," said Mr Zhang.

Mr Gan Chunhui, deputy head of the China Society of Industrial Economics, said the consumption- driven economy developing in China not only means rising demand for goods and services, but will also help promote upgrades throughout the industrial chain.

Many of the ceramic products sold at Shanghai Disneyland, for example, are manufactured in Thailand. "With value-added products based on intellectual property, traditional manufacturing will release new vitality," he said. XINHUA

A version of this article appeared in the print edition of The Straits Times on April 08, 2017, with the headline 'US firms cashing in on China's shift to consumer economy'. Print Edition | Subscribe