Connect with us

Economy

These American brands have the biggest exposure to China's economy – CNN

Published

 on


“We are in an era of just-in-time delivery and minimal inventories, so in many cases it probably wouldn’t take long before shortages would show up in supply chains, and consumers might notice delays in product arrival,” William Reinsch, the Scholl chair for international business at the Center for Strategic and International Studies, told CNN Business.
He said that US companies with ties to Wuhan “should be worried.” However, with the ongoing tariffs and rising Chinese labor costs, US companies have recently been moving some manufacturing from China to other countries.
“That’s a long term trend that has been going on for some time, but it will make the effects of the virus less significant now than four or five years ago,” he said.
Still, some companies could feel the impact as the virus spreads. It has killed more than than 100 people and there are more than 4,500 confirmed cases in mainland China, according to health officials in the country. Dozens of others have been infected worldwide, including at least five confirmed cases in the United States.
US businesses with a major manufacturing presence in China could be affected if factories remain closed longer than the planned Lunar New Year shutdown. Beijing extended the holiday from January 30 to February 2 to try and prevent the spread of the virus.
Apple’s production of the iPhone could be hit hard, according to the Nikkei Asian Review. The report said suppliers are nervous they can’t meet Apple’s demand to increase production of the phone because of the coronavirus has spread to Hubei Province where some plants are located.
The company has plants elsewhere in China that make other iPhone parts, notably the Foxconn facilities in Shenzen, which is roughly 600 miles away from the epicenter of the disease.
Apple (AAPL) didn’t respond to CNN Business’ request for comment. But investors and analysts are likely looking for Apple CEO Tim Cook to address the situation on its earnings call Tuesday.
General Motors (GM) is another US company in Wuhan. The car company operates a manufacturing plant with GM’s Chinese partner SAIC and Dongfeng Motor Corporation, which is one of the country’s largest auto groups. The GM-SAIC plant in Wuhan has about 6,000 employees, about 10% of GM’s total work force in China.
GM previously told CNN Business that it is staying abreast of the development and advising employees who don’t feel well to not come to work. “The most important thing is to contain the virus – production is secondary to the health of the team and community,” said a GM spokesman.
The disruption is coming at a “critical” time for Tesla (TSLA), according to Dan Ives, an analyst at Wedbush Securities, as it ramps up production from its new factory in Shanghai. But, for now, Ives doesn’t predict “any major disruption on the horizon.”
Several well-known food companies, including Starbucks (SBUX), McDonald’s (MCD) and KFC have also limited operations in Hubei.
Nike (NKE) brought in $6.2 billion in revenue from the Greater China region in 2018, up 21% from the prior year compared to just 7% growth in North America. China has been Nike’s fastest growing market for the past two years.
Under Armour (UA) is another sportswear company with a heavy presence. While it does not break out revenue from China, its sales in Asia Pacific have grown faster than in other areas.

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Canadian retail sales slide in April, May as COVID-19 shutdown bites

Published

 on

december retail sales

Canadian retail sales plunged in April and May, as shops and other businesses were shuttered amid a third wave of COVID-19 infections, Statistics Canada data showed on Wednesday.

Retail trade fell 5.7% in April, the sharpest decline in a year, missing analyst forecasts of a 5.0% drop. In a preliminary estimate, Statscan said May retail sales likely fell by 3.2% as store closures dragged on.

“April showers brought no May flowers for Canadian retailers this year,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

Statscan said that 5.0% of retailers were closed at some point in April. The average length of the closure was one day, it said, citing respondent feedback.

Sales decreased in nine of the 11 subsectors, while core sales, which exclude gasoline stations and motor vehicles, were down 7.6% in April.

Clothing and accessory store sales fell 28.6%, with sales at building material and garden equipment stores falling for the first time in nine months, by 10.4%.

“These results continue to suggest that the Bank of Canada is too optimistic on the growth outlook for the second quarter, even if there is a solid rebound occurring now in June,” Mendes said.

The central bank said in April that it expects Canada’s economy to grow 6.5% in 2021 and signaled interest rates could begin to rise in the second half of 2022.

The Canadian dollar held on to earlier gains after the data, trading up 0.3% at 1.2271 to the greenback, or 81.49 U.S. cents.

(Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith in Toronto, editing by Alexander Smith)

Continue Reading

Economy

Canadian dollar notches a 6-day high

Published

 on

Canadian dollar

The Canadian dollar strengthened for a third day against its U.S. counterpart on Wednesday, as oil prices rose and Federal Reserve Chair Jerome Powell reassured markets that the central bank is not rushing to hike rates.

Markets were rattled last week when the Fed shifted to more hawkish guidance. But Powell on Tuesday said the economic recovery required more time before any tapering of stimulus and higher borrowing costs are appropriate, helping Wall Street recoup last week’s decline.

Canada is a major producer of commodities, including oil, so its economy is highly geared to the economic cycle.

Brent crude rose above $75 a barrel, reaching its highest since late 2018, after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 U.S. cents, after touching its strongest level since last Thursday at 1.2265.

The currency also gained ground on Monday and Tuesday, clawing back some of its decline from last week.

Canadian retail sales fell by 5.7% in April from March as provincial governments put in place restrictions to tackle a third wave of the COVID-19 pandemic, Statistics Canada said. A flash estimate showed sales down 3.2% in May.

Still, the Bank of Canada expects consumer spending to lead a strong rebound in the domestic economy as vaccinations climb and containment measures ease.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up nearly 1 basis point at 1.416%. Last Friday, it touched a 3-1/2-month low at 1.364%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

Continue Reading

Economy

Toronto Stock Exchange higher at open as energy stocks gain

Published

 on

Toronto Stock Exchange edged higher at open on Wednesday as heavyweight energy stocks advanced, while data showing a plunge in domestic retail sales in April and May capped the gains.

* At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 16.77 points, or 0.08%, at 20,217.42.

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

Continue Reading

Trending