Losing the Chinese shopper could soon have global consequences

This report is taken from this week’s CNBC The China Connection newsletter, which brings you insights and analysis on what’s driving the world’s second-largest economy. You can subscribe here.

while NvidiaIts market share It went to zero In China due to US restrictions, apple It is seeing a rise in domestic demand for the iPhone.

It’s no small feat for Apple. On top of escalating US-China trade tensions and slowing consumer spending, the smartphone company faces an onslaught from Chinese rivals who are also fighting for market share abroad.

But the iPhone manufacturer, like many of its Western counterparts, It’s not about to give up on Chinaespecially since The largest shopping event in the world – Singles’ Day – begins.

In just a few months, Apple has revamped its local strategy. In August, the company finally opened an account on the social media app Xiaohongshu, or RedNote, which has become the leading place for stylish consumer content in China.

And as Live broadcast It has become a staple of Chinese e-commerce, CEO Tim Cook He reportedly joined a session on ByteDance’s Douyinthe Chinese version of TikTok, last week to announce the launch of the iPhone Air finally in mainland China after an initial delay. Cook also met the creator of Labubu Kasing Lung During his visit to Shanghai.

Combined with product improvements, the marketing paid off.

As Singles’ Day kicked off on Monday evening, iPhone sales surged in the first two hours on Alibaba’s Tmall platform exceed the total From the first day of last year’s event.

Earlier on Monday, analysis firm Counterpoint Research said unit sales in the first 10 days of the new iPhone 17 series in China nearly doubled those of its predecessor.

Strong iPhone 17 sales in the United States, Apple’s largest market, also helped. Apple shares reached a record high on MondayWhich strengthened its position as the second most valuable public company in the world after Nvidia.

Greater China, which includes Hong Kong and Taiwan, remains Apple is the third largest marketIt contributed about 16% of sales in the three months ending June 28.

China is no less important Nikeresulting in an increase of about 13% of the sports brand’s sales in the quarter Ended August 31st. to LululemonMainland China is its second largest market outside the Americas 16% of total net revenues As of this summer – up from 13% last year.

All companies saw strong results as Singles’ Day began. In the first hour, Apple, Lululemon and Nike were among 80 brands sold on Tmall that saw sales exceed 100 million yuan ($14.05 million), Alibaba said. The Singles’ Day promotional event ends around November 11.

Alibaba Vice President Zhang Kaifu, who oversees e-commerce AI, told reporters last week that the company had done so. It has already reinvested in AI In the field of online shopping.

The company is far from the only one using AI in retail. Smartphone company Honor last week also released an on-device AI tool that can do this Quickly compare prices – including coupons – across online shopping sites In China.

AI-driven retail is not new in China, said Charlie Day, vice president and principal analyst at Forrester. He noted that Chinese retailers and manufacturers have been using AI tools over the past decade to forecast demand and manage supply chains, reducing inventory waste.

“[This year,] We can also expect virtual experiences, AI-driven live hosts, and conversational assistants on e-commerce and social media platforms like JD.com and Douyin to boost engagement, reduce revenue, and lower influencer costs.”

These cost savings come at a critical time for brands. Retail sales in China grew By only 3% in September Compared to last year, it is well below the levels seen before the pandemic.

This hasn’t stopped LVMH Since opening this summer, The Louis is a flagship store located in a ship-shaped building across from one of the world’s largest Starbucks Reserve locations in downtown Shanghai.

More than 100,000 people pass through the Lewis Hotel every day, and about 2,500 people visit it daily, according to HSBC analysts. “In a market that needs some joy, an element of surprise, and real reasons to reconnect with brands against the bleak backdrop, the initiative is clearly hitting a nerve even four months after opening,” they wrote in a note on Monday.

One of Louis visitors last month LVMH’s CEO was Bernard Arnault, who also reportedly checked the arrogant Chinese Luxury brand Laopu Gold. The European luxury goods giant last week reported an improvement in Chinese consumer spending domestically, rising by mid-to-high single digits, with Asia remaining in first place. Largest market by revenuebefore the United States

to Some of the richest people in the worldTensions between the US and China will not stop them from trying to engage with Chinese consumers.

As Li and Yuan Han, partner at consultancy Bain & Company, summarized: Very few brands leave China, if only to defend global market share.

“If you lose here, you will eventually lose everywhere, because your local competition is going offshore, and your e-commerce platforms are going offshore.”

LVMH will only confirm that Arnault visited The Louis hotel in Shanghai. Apple did not respond to a request for comment.

China replaces WTO negotiator Beijing announced on Tuesday that Li Chenggang, vice minister of commerce who was a member of the US trade negotiating team, would join the team. It doesn’t hold up anymore His other role is as a representative to the World Trade Organization.

Real estate drags growth. China recorded GDP growth of 4.8% in the third quarter, but investment in fixed assets during the first nine months of the year Contracted unexpectedly With the increasing decline in real estate investment.

China is replacing US soybeans. For the first time since 2018, China imported zero soybeans From the United States, they are instead heading to South America for the crop, according to September data.

the Hang Seng Index The CSI 300 fell 1.27%, while the CSI 300 fell 0.7%. Both indices have added 28.1% and 16.29%, respectively, this year.

The yield on 10-year Chinese government bonds settled at 1.768%.

October 23: China’s top leaders concludeFourth plenary session“To discuss the five-year goals

October 23-25: Chinese research center CF40 hosts the Bond Summit in Shanghai

October 25: US Treasury Secretary Scott Besent is expected to meet with Chinese Vice Premier He Lifeng in Malaysia. Shenzhen-based GoPro competitor Insta360 To open it The first flagship store in Hong Kong

October 27: China announces industrial profits for September

October 27-30: China holds the state-organized Financial Street Forum in Beijing

October 29: APEC CEO Summit It begins in South Korea ahead of the economic leaders meeting; The Hong Kong Stock Exchange was closed for a local holiday