MNI REALITY CHECK: China Sales Recovery Continued Through May

--Sales Recover As Covid-19 Impact Wanes, Hospitality Sector Struggling

     BEIJING (MNI) - China's retail sales look set to continue recovering in

May, supported by robust sales and strong demand for cars as the coronavirus

epidemic eases, industry insiders told MNI, although the hospitality sector is

still struggling with tourism industry only very slowly getting back to normal.

     Key points from their comments ahead of the June 15 retail sales data

release:

     -Around 90% of the department stores have reopened with sales recovering to

60% of levels last May.

-The overall recovery in the retail market is faster than expected, helped by

the May Day holiday. 

-Passenger car sales reversed negative growth first time since June 2018.

-Many travel agencies remain closed, dampening restaurant demand.

YANG QINGSONG, SEC-GENERAL CHINA COMMERCE ASSN FOR GENERAL MERCHANDISE

     "(About) 95% of retailers have resumed operations in May. Those unopened,

mainly restaurants and clothing chains, have either tried some other business or

gone bankrupt."

     "Most reopened retailers saw a more than 20% m/m growth in their sales

revenue in May from April. 90% of the retailers, mainly department stores, saw

their sales recover to 60% of the level same period last year, while 87% of them

saw store traffic rebound to 60% of last May."

     "The overall recovery in the retail market is faster than expected, helped

by the May Day holiday and coupons issued by the governments and merchants,"

said Yang, who expect offline sales will further accelerate in June as social

distancing rules are relaxed.

     Yang believes retail sales growth could even turn positive as early as

June.

     A MANAGER OF A MAJOR GLOBAL ATHLEISURE CLOTHING CHAIN

     "Our store traffic and sales have pretty much returned to the levels before

the pandemic. There's little sign of the outbreak lingering."

     "China is a major exception among our global markets and the focus of our

growth this year," the manager said.

     CHINA PASSENGER CARS ASSOCIATION

     Car sales hit 1.61 million in May, a rise of 1.8% y/y. The sales gains in

the first five months were around -20%, -78%, -40%, -3% and 2% y/y respectively,

confirming a V-shape rebound since the early days of the outbreak.

     On a monthly basis, sales grew 12.6% from April, as car demand picks up as

restrictions ease and schools reopen. Stimulus measures kicking in also helped.

     A MANAGER OF AN INTERNATIONAL TRAVEL AGENCY

     "The tourism market barely recovered in May. Most travellers chose short

trips to the suburban areas during the May Day holiday, concerning over

application of the 14-day quarantine rule after returning back to the city."

     "We haven't resumed operations yet, nor have most of our rivals. Although

restrictions have eased, there is no point reopening if there is no business.

People certainly prefer road trips over group tours now."

     "At best, domestic travel can gradually recover in the second half of the

year, but it won't be as booming as last year even during the peak season. And

we doubt if outbound travel would be allowed next year."

     "The only thing we can do is to wait. Our staff make their own living by

selling things online or becoming delivery men. These are the two thriving

businesses even during the epidemic."

     ANALYSTS FROM CIB RESEARCH

     Retail sales contraction seen narrowing to -2% y/y, as spending on retail

goods recovers. Weak travel demand weighs on the hospitality sector, with

nationwide May Day passenger traffic down 53% y/y.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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