Throughout 2018, the topic of China maintained a regular position in the news cycle. Even here in Colorado, things that have been happening halfway around the world are having a direct impact on our economy; so much so that we at the Denver South Economic Development Partnership are keeping a close eye on them.
As we begin 2019, here are a few of the trends that we’re watching in China that could impact us here at home.
Taking a bite out of Apple
In a letter from Apple CEO Tim Cook to investors this month, the technology company blamed “China’s economy [which] began to slow in the second half of 2018,” for its soft sales performance recently.
That’s part of it, but the problems hitting Apple in China may be more geopolitical than economic in nature, especially considering the fact that “China’s top three smartphone brands registered positive growth in the first three quarters,” indicating that the people are still buying new phones.
After all, when Chinese consumers rallied behind Huawei after the arrest of the company’s CFO in Canada, they weren’t protesting the premium price positioning of Apple products. Their sentiment was captured in one clever Facebook post with the caption, “Last picture taken with my iPhone,” displayed beneath a photo of a brand new Huawei phone.
Huawei, reports South China Morning Post, surpassed Apple this year to become the world’s second-largest smartphone maker, behind Samsung.
What this slowdown means for Apple overall remains to be seen, but given that the company has a sizeable presence in Colorado it’s a trend we’re watching closely.
Services on the rise
The U.S. trade war has indeed started to impact China’s production sector, with factory activity contracting for the first time in 19 months.
But, at the same time, other sectors are on the rise, led by the service industry that in December grew the most it had since June 2018. So, while factories are slowing down, other sectors of the Chinese economy are still marching upward.
Given that Colorado’s economy is largely service-oriented itself, the growth of China’s service sector is worth watching too. Will these new companies emerge as potential competitors to some Colorado homegrown firms?
Startups scaling up
One of the major themes in China right now that too often gets overlooked is the growth of the country’s startup scene. After all, entrepreneurship isn’t just a U.S. phenomenon.
The difference is, in China everything is bigger.
Case in point: One of the rising stars on the country’s startup scene—with a bold target of counterbalancing the market dominance of Starbucks—is local player Luckin Coffee. It’s a coffee shop chain that’s setting itself apart through a strategic combination of mobile payments (no cash or credit card accepted) and aggressive expansion.
Luckin plans to open 2,500 new stores in 2019, after having opened some 2,000 stores already since launching only one year ago. That goal puts the company on track to overtake Starbucks as the largest coffee chain network in China.
And growth like that can quickly turn a company into a global force.
The Year of the Pig is going to be big for China. Will the rest of the world keep up?
Sean Doherty is a Colorado native and graduate of Metropolitan State University, living and working in Hong Kong, Shanghai, and Nanjing, China. Sean represents the Denver South Economic Development Partnership as the Greater China Exchange Coordinator, focused on fostering the exchange of ideas, strategies, and talent between China and the metro-Denver area. In 2016, Sean was selected as a Jiangsu Province Youth Friendship Ambassador. He can be reached at KairosHappens@gmail.com.
