With the global financial crisis darkening the outlook in the developed world, companies as diverse as General Electric Co. and as focused as Cold Stone Creamery have been pressing ahead with their China expansion plans in the hopes that the world's most populous country will deliver.
GE recently set up five regional headquarters across China to sell more wind turbines, diesel engines and medical equipment. Cold Stone Creamery plans to open 20 to 25 stores in the Middle Kingdom.
"China will be our No. 1 market we are developing," said Lee Knowlton, president of the international division of Kahala Corp., the Arizona franchiser of the ice cream brand.
But even before Monday's economic report, there were signs that corporations banking on China -- including retailers, shipping firms and manufacturers -- may be in for a rude shock.
Tens of thousands of Chinese factories have shut down this year. Two weeks ago, China's biggest dye producer for the garment industry closed, leaving 4,000 people jobless. Last week, one of the nation's largest toy makers, a onetime supplier to Mattel Inc. and Hasbro Inc., went out of business, casting away 6,500 workers.
General Motors Corp., which recently broke ground on a $250-million research and corporate park in Shanghai, had been counting on China's auto market to expand at a double-digit pace this year. But sales fell 6.3% in August from a year earlier, then dropped again last month by more than 2%. That prompted J.D. Power & Associates to halve China's sales growth forecast this year to 8%. Next year, the Chinese auto market is projected to be flat.
"A decline is not out of the question," said Michael Dunne, J.D. Power's managing director in China. "That's some tough news. China will not compensate for falls in the rest of the world. It's not going to be the savior."
The National Bureau of Statistics said Monday that retail sales in China jumped in September by more than 20% from a year earlier -- a pace that's been consistent all year. But those figures overstate the robustness of consumption, said Ha Jiming, chief economist at China International Capital Corp., a Beijing investment bank. Separate government survey data indicate that urban household consumption rose only 5.7% in the first half of this year, reflecting slower spending and income growth, Ha said.
