A JD.com courier drives past the Zaha Hadid-designed Galaxy Soho complex in Beijing, China, on Saturday, Feb. 18, 2023.
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BEIJING — China has yet to see a strong rebound in consumer spending, according to major companies.
Consumer spending is recovering in an imbalanced way, which means it will likely take until the second half of the year for the speed of recovery to improve, Lei Xu, CEO and executive director of e-commerce giant JD.com, said in an earnings call Thursday.
He said it will take time for the government’s stimulus measures to show up in consumers’ income and confidence.
JD reported Thursday a 7.1% increase in net revenue in the fourth quarter to 295.45 billion yuan ($42.8 billion). That’s below expectations for 296.2 billion yuan, according to Reuters.
JD’s shares dropped by more than 11% in Hong Kong trading Friday. The company’s U.S.-listed shares closed more than 11% lower overnight.
JD.com share performance over the last 12 months
Many investors were disappointed by JD’s net margin of 2.7%, William Ma, chief investment officer of Grow Investment Group, said Friday on CNBC’s “Squawk Box Asia.”
Ma expects margins could fall to around 1% due to competition in China’s consumer market. He pointed out that JD on Thursday did not indicate it would stop subsidies — after launching a 10 billion yuan subsidy program earlier this year.
Official data released this week showed China consumer prices rose by a muted 1% in February compared to a year ago.
The greater-than-expected softness in the consumer price index “casts doubt on the strength of domestic demand recovery in the household sector,” Zhiwei Zhang, president, Pinpoint Asset Management, said in a note. “It is puzzling to me as it contradicts with other data points that suggest the recovery of domestic demand is quite strong.”
Covid controls and a real estate slump dragged down China’s economy last year, weighing heavily on consumer and…
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