Spending power pickup

French consumer goods companies enthusiastic about Chinese market

China will remain a key go-to destination for French consumer goods providers as the recovery of the country's huge and lucrative domestic market will create more momentum for them to maintain robust growth amid subdued global investment sentiment, said French business executives.

They emphasize that China's growing population of middle-income earners present significant opportunities for consumer goods businesses. French companies in this sector are planning to expand the presence of their brands across the country by opening new stores and raise awareness by participating in the annual China International Consumer Products Expo in Hainan province.

The third China International Consumer Products Expo will be held in Haikou, capital of Hainan, in mid-April. More CEOs from leading global companies, overseas exhibitors and foreign buyers from countries such France, Germany, Italy, Japan and the United States are expected to participate in person, according to the Hainan Provincial Bureau of International Economic Development.

The Government Work Report this year also prioritized the recovery and expansion of consumption, so foreign companies in the fields of cosmetics, toys and food are looking to tap into China's rebound.

Bruno Chevot, president for China, North Asia and Oceania at French food products company Danone SA, said China is a strategically important market for Danone. He said that the country's opening-up policies facilitate the continuous optimization of the business environment for foreign companies in China, which is a development booster for foreign companies such as Danone. The company has benefited from the continuously evolving laws and regulations, widening market access, constantly upgrading infrastructure and stable supply chains.

The Chinese mainland has become the group's second-largest market, with Danone having a leading position in early life and pediatric nutrition, advanced medical nutrition serving patients in hospitals and the vitamin beverage category in China.

"We remain confident in the great potential of China's consumption market. We have seen increasing awareness of full life cycle nutrition, especially rising demand for segmented health needs in the areas of early life nutrition and healthy aging," said Chevot, stressing the company will continue to leverage its expertise in science-based nutrition, supporting the early life nutrition needs as well as the aging process with more customized products in 2023.

Danone will also leverage China's opening-up platforms including pilot free trade zones, cross-border e-commerce channels and the China International Import Expo, held in Shanghai annually, to bring in more advanced products and services, he added.

That optimism is also shared by Fabrice Megarbane, president of L'Oreal North Asia Zone and CEO of L'Oreal China: "Overall, I am optimistic, confident and ambitious in the short and longer term about China. The country's opening is one of the patches of blue sky, and L'Oreal is preparing for the rebound in the beauty market."

He added that consumer numbers and purchases have shown a positive trend since the start of February, so he expects a progressive rebound from the second quarter and to see consumer enthusiasm bounce back in all categories.

"China is the new investment landmark. We will invest in China continuously in the future and empower the open (local) innovation ecosystem," he said. Enthusiasm has also been boosted by the fact that domestic consumption is expected to be the main driving force behind China's steady growth this year.

Wu Chaoming, deputy director of the Chasing International Economic Institute, predicted that China's retail sales are likely to grow by between 7 and 11 percent this year, given the optimized COVID-19 containment measures, the rebound in economic activity, the release of household savings and the low comparison base.

As the world's second-largest consumer market, China boasts a middle-income group in excess of 400 million people, with retail sales totaling 43.97 trillion yuan ($6.4 trillion) last year, data from the National Bureau of Statistics show.

French audio technology company Devialet said it is ramping up its investment in China and plans to open additional brick-and-mortar stores in more second-tier cities in an attempt to tap the immense consumption potential of the country's younger generation.

Franck Lebouchard, the group's CEO, highlighted the significance of the Asian market — especially China — for the company, which offers a wide range of acoustic products, such as speakers, amplifiers and wireless earbuds. "China is absolutely an essential market for Devialet. Only four months after we opened our first pop-up store on the Chinese mainland in 2019, it became our second-largest market after France," he said.

It is noteworthy that China boasts a rising demographic of young consumers, who are dynamic and brand-savvy, and they are looking for the best in every domain, such as bold design and outstanding acoustic quality, he added.

"In the past two years, we have opened brand stores in more cities, especially in first- and second-tier cities, such as Shenzhen in Guangdong province and Wuhan in Hubei province, with the total number of offline stores on the Chinese mainland now 10," he said.

Experts said that with China firmly committed to opening-up and continuing to expand market access while improving the business climate and services for foreign investors, a growing number of foreign companies will feel that investing in China is investing in the future.

Underpinned by steady economic recovery, China will provide increasingly huge development opportunities for companies at home and abroad, said Wei Jianguo, former vice-minister of commerce and vice-chairman of Beijing-based China Center for International Economic Exchanges.

Wei said the government will likely launch more policy measures this year to boost the confidence of foreign investors while improving the quality of overseas trade and foreign direct investment.

These moves will enhance the positive interplay between domestic and international economic activity, and inject more growth impetus into the global economy against headwinds, said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing. China will reinforce support for innovation and encourage foreign companies to engage with its new development tracks to gain greater impetus for growth this year.

Relevant measures include encouraging foreign investors to set up research and development centers in China, and cultivate emerging sectors such as digital trade and the green economy, according to information released by the Ministry of Commerce.