McDonald’s, Apple and Tesla can’t bet on making a fortune in China anymore
Analysis by
Laura He, CNN
Published 10:04 PM EDT, Mon May 13, 2024
Paul Lakatos/South China Morning Post/Gety Images
McDonald's opened its first restaurant in Shenzhen in 1990.
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For decades, Western companies made a fortune betting on the inexorable rise of the Chinese consumer. Now an economic slump and the emergence of ferocious local competitors means those bets look less safe as price wars erupt.
Discounts and special deals are being offered across consumer brands from food and clothing to consumer electronics and cars, reflecting a dramatic shift in consumption patterns in the world’s second largest economy.
One of the most intense price wars is raging in the electric vehicle (EV) industry, where
a “life and death” race has manufacturers scrambling for survival.
Tesla’s China market share shrank to 4% in April, almost halving from 7.7% in March, according to data released by the China Passenger Car Association on Friday. Deliveries from its Shanghai factory, its largest globally, fell 18% last month from a year earlier.
The sharp drop contrasts with rising sales by its biggest Chinese rival BYD, which reported a 29% jump in pure EV deliveries.
“Everyone has changed the way they think about China,” said Anne Stevenson-Yang, co-founder and managing principal at J Capital Research. “The business climate has changed entirely.”
Last month, Tesla (
TSLA) announced
aggressive price cuts in the country, shortly after also reducing prices in the United States and Germany. The move added to a
series of price reductions that it has made in its biggest overseas market since late 2022.