Global brands, including Porsche and Nestle, believe that China’s economy has begun to get back on the track and that the worst has passed.
Roland Decorvet, Nestle’s Greater China chairman, still sees China as an ‘amazing opportunity’, while Porsche AG’s China CEO Deesch Papke said that he expects the Asian country to surpass the US in 2014 and become the largest market.
This means that more global brands have faith that Chinese Premier Li Keqiang will manage to sustain growth through restructuring measures such as tax cuts and rail spending aimed at stopping the two-quarter slowdown. Last month the aggregate credit, retail sales and industrial production have increased more than analysts’ expectations, prompting them to rise projections.
“China has stepped out of the bottom of this economic cycle,” said Ma Jun, chief China economist at Deutsche Bank in Hong Kong. “I believe the recovery will be sustained for one year or even more than one year.”
Analysts predict that the producer-price index, which has dropped for 18 consecutive months, will reach the positive line in the next six months, which means that economic growth will continue to increase. Last year Nestle invested $490 million to build two plants in China and during the first half of this year the company increased around 10%.
Porsche’s Papke expects China sales to increase in 2014, relying on the new Macan compact SUV and the plan to expand into the country’s inner regions. Carlsberg A/S said that increasing urbanization and incomes will translate in rising demand for its premium brands, such as Tuborg and Carlsberg Light.
“The momentum we have seen in the first half, we can continue in the second half,” said Carlsberg’s head in China Soren Ravn. “After many years of urbanization, you can start to do more of a cluster strategy and go for big cities.”