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Will Chinese Consumers Punish US Companies?

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Chinese consumers

In an interview with CNBC, Apple’s (AAPL) CEO Tim Cook talked about possible backlash from Chinese consumers amid the country’s trade standoff with the US (QQQ). Cook said there are “sporadic reports, about somebody talking about not buying our products because we’re American.” Cook said, “My personal sense is that this is small.”

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A boycott?

In the past, Chinese consumers have boycotted foreign products. Chinese consumers have been known to shun products and avoid travel to regions that have been engaged in a political rift with the country. In 2017, South Korea’s decision to deploy the US THAAD (Terminal High Altitude Area Defense) system wasn’t received well in China. The country launched an unofficial economic blockade of South Korea. Hyundai, a South Korean automotive giant, saw its sales fall after Chinese consumers boycotted South Korean products.

Major market

China is a major market for US giants like Ford and General Motors. The trade war and President Trump frequently lashing out at China could do structural damage to US companies in China. Even if the US and China arrive at some sort of a trade deal, Chinese consumers’ perception of US brands could take a hit, which might not be restored that easily.

Several US companies including Alphabet (GOOG), Facebook (FB), and Walmart (WMT) have been lobbying against President Trump’s tariffs. Even with tariffs, Chinese exports to the US rose 9.8% YoY (year-over-year) in November. However, China imported fewer goods from the US. The imports fell 25% YoY in November.

To learn more, read Trump’s Tariffs Are Hurting China, but Aren’t Helping US Much.

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