U.S. Brands Have Special Luster in China

Tuesday in Beijing, President Obama credited China with helping to pull the United States out of its recession. And while Mr. Obama continues to push China to open its markets to more American products, U.S. companies are already making lots of money there, CBS News correspondent Celia Hatton reports.

Sam's Club is winning customers over in the southern Chinese city of Guangzhou. A recent store opening - complete with drummers and other festivities - marked the 173rd in China for parent company Wal-Mart in just 13 years.

The enthusiasm for spending money over there is pulling the U.S. company - and many others - through the global recession.

It's "American Products Day," and the store's 10,000 customers are celebrating, snapping up U.S. brands from vitamins to laundry detergent.

Clearly, capitalism is a hit in Communist China. Older generations still save half their paychecks, but that trend's reversing as a nation of young shopaholics is born. Salaries for young, urban Chinese have almost tripled in less than a decade from $858 to $2,300 a month, but people in their 20s and 30s save next to nothing.

Instead, they're on a spending spree. The best indicator? The number of credit cards is exploding - from 13 million cards in 2005 to 180 million now.


American businesses are riding high on the buying boom, thanks to people like Zhao Mengyao. She drives a Buick, chats on an iPhone, eats at McDonald's and wears Nike.

"Brands are really important to me," she said through a translator, "and then I look at the price tag."

It seems like every major American company is digging its way into China. Caterpillar's had a bumpy ride because of the U.S. recession, but in China its revenues have grown from $700,000 a year in 2005 to $2.6 billion this year.

The NBA's 30,000 Chinese retail spots are selling 60 percent more merchandise this year than last.

Nike entered China early back in 1980 and now it's the country's No. 1 sports brand. Revenue went up 22 percent in China this year. In the United States it was just 2 percent. The Chinese bought $1.7 billion worth of Nike products in 2009, up from $1.4 billion a year earlier.

KFC and Pizza Hut are also feeding Chinese appetites faster than ever before. They're opening one or two restaurants a day in China.

"We think this is the best growth opportunity of the 21st Century and maybe even beyond," said Sam Su, president of Yum! Brands - the chains' parent company - in China.

But perhaps no one's as thankful for China's big spenders as General Motors. The company faced bankruptcy early this year in the U.S., but it's never been hotter in China, where first-time drivers are still excited to get behind the wheel of a brand new American car.

Still, experts caution it's just as hard for U.S. companies to succeed in China as it is back home.

"If you are ready to operate in an environment that is chaotic, that is brutal but that has real opportunity, that's when you should come over here," said analyst David Wolf. "But don't come over here with candy corn dreams about some beautiful pot of gold that awaits you here."

Getting that pot of gold requires work. But American companies that haven't expanded to China may regret missing out on the great Chinese shopping spree.
  • Celia Hatton

Comments

CBSN Live

pop-out
Live Video

Follow Us

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.

On Twitter