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Beer and Noodles Suffer Dip in Sales as Sports Apparels Gain Momentum

| Apr 04, 2017 07:57 AM EDT

A pitcher of Tsingtao Beer

The sales of beer, noodles and cinemas are experiencing a dip in China, the world's second largest economy.

Last week, China's number two brewer, Tsingtao Brewery Co Ltd, saw its net profits suffer its steepest drop in 20 years as noodle maker Tingyi had its profits reduced by a third. Tsingtao, which blamed tough competition and weak demand for their poor sales, posted a 12 percent increase in international sales in 2016. It is sold in 94 countries.

China's top cinema operator, Wanda Cinema Line, and IMAX China suffered a reduction in profits. Wanda's profits from 2016 went down by 50 percent from a year before.

Meanwhile, home appliance retailer Gome suffered a 73 percent reduction in full-year profit.

Li Dongsheng, chairman of television maker TCL Multimedia, warned that this year the Chinese and global economies will deal with downward pressure that will result in sluggish market demand.

Ben Cavender, Shanghai-based principal at China Market Research Group, noted that consumers are "becoming more cagey" on spending their money.

Analysts said that companies should innovate and fend off competitors in order to survive.

While retail sales exhibited in December were at their fastest growth pace for 2016 due to robust sales in cars and cosmetics, they were weak in the first two months of 2017.

Income growth in China didn't match huge consumption growth last year.

Furthermore, growth in the services sector is in a four-month low due to increasing competition that made it more difficult for companies to pass on costs to consumers.

The brighter spots were in the sports apparel industry, with firms like Li Ning Co Ltd and Anta Sports enjoying a boost as the Chinese government continues to strengthen its sports industry and the citizens becoming more health-conscious.

Global uncertainties such as the effect of U.S. President Donald Trump's trade policies and Europe's political are expected to cloud 2017.

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