Unilever, the renowned British consumer goods company, announced on Tuesday (Jul 25) that a slump in China’s property market and exports has led to a significant drop in consumer sentiment, reaching an unprecedented low.
This comes as a surprise, as Unilever had previously predicted a surge in Chinese consumption earlier this year.
Unilever, the multinational company behind popular brands such as Dove soap and Ben & Jerry’s ice cream, has identified a significant opportunity in China.
In February, the company highlighted a substantial amount of “excess household savings” in the range of US$1.5 trillion to US$2 trillion.
Unilever believes that tapping into this surplus could potentially drive its sales growth not only in China but also in Southeast Asia.
Beijing, following a nearly three-year implementation of a “zero-COVID” approach, has recently eased its restrictions significantly and announced plans to enhance imports and stimulate consumption in order to bolster the economy.
Significant developments have taken place in the region since that time.
China’s economic data for the month indicates a decline in its post-pandemic growth, leading to speculation that the government will implement additional stimulus measures to stimulate economic activity and strengthen consumer confidence.
China’s consumer behaviour has become increasingly cautious, leading to a decline in the country’s property market and reduced export demand. Consequently, there has been a notable shift in demand towards the markets of Southeast Asia.
During a recent call with journalists, Graeme Pitkethly, the finance chief of Unilever, highlighted the significant benefits that Thailand and Vietnam have gained from the company’s operations.
China is currently grappling with a significant issue of high unemployment rates, particularly among the younger population.
Chinese consumer confidence has reached a historical low point, according to available data.
Unilever has reported a significant increase in underlying sales growth in China. The growth was in the high single-digits and showed a recovery in the second quarter.
This growth was primarily driven by a double-digit increase in volume, which was in contrast to the previous year’s figures that were affected by lockdown measures.
Unilever, a multinational consumer goods company, announced its earnings on Tuesday, surpassing expectations for underlying sales growth. The company achieved this by implementing price increases to counterbalance rising costs, resulting in a positive impact on its shares.