The Rising Influence of Rising Affluence

[DewDiligence]

Some less than stellar news from China…

Although many companies continue to rack up impressive growth in China (particularly in food, consumer products, and healthcare), a few blue-chip industrial companies such as CAT, MMM, and UTX are reporting a slowing of sales growth—or even an actual year-over-year decline—in China. Some excerpts from ft.com:

http://www.ft.com/intl/cms/s/0/ed5a432e-8f1f-11e1-ab32-00144feab49a.html

Caterpillar said it had overestimated Chinese demand for construction equipment and now expected demand to decline in China this year, down from its prior forecast of growth of 5-10 per cent.

… 3M, the diversified manufacturer, also singled out Latin America. “The western hemisphere is doing well, with Latin America leading the way,” said Inge Thulin, chief executive. “Western Europe has stabilised, but at lower levels. Growth in Asia is slow because of China, Japan and electronics markets.”

…At United Technologies, the industrial conglomerate, Chinese orders fell by 15 per cent in the first quarter, with demand at its Otis elevator unit dropping by 21 per cent, but orders rose by one-fifth in Brazil, India and Russia. “The problem in emerging markets for us is really isolated to China,” said Greg Hayes, chief financial officer.

Elevator orders in UTX’s Otis division are notoriously lumpy, but the drop in sales is nevertheless an indication of some kind of slowdown in China’s construction of high-rise buildings.