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Trade War

Chinese shun American purchases as trade war stings

GM sales drop 15%, while tourists choose to go to Asia

GM and its joint ventures delivered 835,934 vehicles in China during the July-September quarter, with sales down nearly 15% on the year.   © Getty Images

DALIAN, China -- Chinese consumers are tightening their belts amid the global economic uncertainty created by the trade war with the U.S., avoiding American vacations and automobiles as President Donald Trump turns up the pressure.

"It feels like customers are staying away from U.S. brands," a manager at a General Motors dealership here said.

GM and its joint ventures delivered 835,934 vehicles in China during the July-September quarter, with sales down nearly 15% on the year. The automaker, which perennially wrestles with Volkswagen for the Chinese crown, could suffer a decline in full-year sales. A recall of about 3.3 million vehicles beginning this month will also likely deal a blow.

New-auto sales in China fell on the year for two months straight starting in July, industry association data shows. The 2018 passenger car sales forecast has been downgraded to a 1% drop from an increase.

Chinese consumers also stayed away from the U.S. during the National Day holiday from Oct. 1 to Oct. 7. America was the fifth-most-popular foreign destination during last year's break -- the top spot outside Asia -- but dropped to 10th this year, according to leading online travel agency Ctrip.

Chinese tourists spent around $758 on average per outbound trip in the first half, down 14.2% from the full-year figure for 2017, Ctrip and the government-affiliated China Tourism Academy research institute found. A softer yuan has eroded purchasing power.

The weeklong National Day break is a predictor of Chinese consumption as one of the country's biggest shopping seasons, along with the Chinese New Year.

The brakes have also been slammed on China's movie market. Demand had grown rapidly since 2015 with the expansion of the middle class. China is increasingly expected to overtake the U.S., the world's largest film market, given sluggish sales there.

But that future will likely be deferred as economic uncertainty, scandals and greater censorship take a toll. Box-office revenues began to turn down last month with a year-on-year decrease, followed by disappointing National Day sales.

Box-office revenues from Oct. 1 to Oct. 7 sank 21% on the year to 1.89 billion yuan ($273 million), according to EntGroup. The research company specializing in Chinese entertainment partly blamed a lack of hits and costly tickets.

 

"It's expensive, so I don't want to go again for a while," said a 28-year old office worker from Dalian who had just seen "Hello, Mrs. Money" with his wife on Oct. 3. Public interest was high in the follow-up to one of last year's major hits, but "the film felt pricey because it did not live up to expectations," the man said.

Chinese movies are relatively cheap at about 30 yuan ($4.35), but consumers are still cutting back. Box-office revenues during the holiday plunged roughly 40% on the year in the northern provinces of Liaoning -- home to Dalian -- Jilin and Heilongjiang, where the economic slowdown has been severe.

The heavier hand of the ruling Communist Party will also weigh on the industry. The party's publicity department took over operations from the now-defunct State Administration of Press, Publication, Radio, Film and Television in March, curtailing the relative freedom filmmakers had previously enjoyed. Audiences will shrink further should there be a flood of works that more closely toe the party line.

The business is also suffering from the scandal involving actress Fan Bingbing, recently fined hundreds of millions of yuan for tax evasion. Her movies have stopped screening, and shares of such major studios as Huayi Brothers Media and Zhejiang Talent Television & Film have slumped.

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