Foreign consumer brands race to resume operations in China

BEIJING (China Daily/ANN) – Retail and entertainment expected to rebound vigorously.

Foreign consumer brands are racing to resume operations in China after closures related to novel coronavirus pneumonia, as experts expect retail and entertainment to enjoy a robust rebound to make up for pent-up demand.

Shanghai Disney Resort announced on Monday it would reopen some shopping, dining and recreational establishments around the facility, while Disneyland park will remain closed.

A company statement said the partial resumption marked “the first step of a phased reopening” since the resort temporarily shut down on Jan 25 to curtail the spread of the contagious disease, officially known as COVID-19.

Each reopened location will operate with limited capacity and reduced hours of operation. The company requires guests entering Shanghai Disney Resort to undergo temperature screening upon arrival and present their health QR code to use dining venues. The codes, obtained by downloading an app, are based on records of users’ movements. Visitors also must wear a mask.

After a string of temporary closings since late January, Starbucks Coffee Co has reopened 90 per cent of its stores in China. Its China headquarters and Starbucks Reserve Roastery in Shanghai, Farmer Support Centre in Yunnan province and regional support centres have resumed operations.

The company is expected to open about 95 per cent of its China stores by the end of the second quarter, according to a note from Kevin Johnson, president and CEO, to shareholders on Thursday.

Fast food chain McDonald’s has also reopened 90 per cent of its more than 3,300 restaurants in the country, following its rollout of group delivery services to enterprises that have resumed work since Feb 10.

The trends validate a survey by consultancy Kantar in February that out-of-home dining and entertainment are among sectors that would bounce back the fastest after being hammered by the epidemic.

“To multinational brands, the Chinese market, given its scale and growth momentum, plays a crucial role in their overall performance,” said Jason Yu, general manager of Kantar Worldpanel China. He forecast offline shopping would gradually pick up, with a particular rebound in milk tea beverages and catering services that were popular among social media users.

Others are joining the fray, with Apple Inc reopening over 90 per cent of its retail stores in the country as it aimed to rebound from a sales hit tied to COVID-19.

While some stores operate on shortened hours, 38 of the 42 Apple stores on the Chinese mainland are open, the company said on Monday. CEO Tim Cook said last week he is “very optimistic” as China is getting the virus under control.

Swedish home furnishing company Ikea had seen 16 outlets restore operations with modified hours as of Monday. Another 11 stores were scheduled to reopen on Wednesday. The company has 30 stores on the Chinese mainland, according to its website.

Restaurants, child play centres and maternity centres at Ikea stores are still closed for now, while the company’s website and customer centre have stayed open.

Zhang Liqing, chief economist at PwC China, said “phased business resumption” makes great sense, as production and services should resume in areas where the risk is well under control.

“As long as the epidemic is controlled within the first quarter, impacts on economic growth will be watered down amid a full year of growth that includes recovery, from the second quarter and beyond,” said Zhang Jun, dean of the School of Economics at Fudan University.

Ma Si in Beijing contributed to this story.

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