* Data doesn't reflect true picture, says footwear retailer
* Cautious view contrasts with official line that economy is
* July retail sales slowed to 13.2 percent from year earlier
By Anne Marie Roantree and Donny Kwok
HONG KONG, Sept 2 If things are really starting
to look up for China's economy, as a recent spate of
better-than-expected government data seems to suggest, nobody
appears to have told its biggest retailers.
A Reuters review of first-half earnings showed that more
than 20 Chinese companies selling everything from footwear to
food were not convinced the economic slowdown had bottomed out,
and neither were their traditionally thrifty customers.
"The reality behind the numbers is gloomier," said leading
footwear retailer Belle International Holdings Ltd as
a raft of data, supported by government statements, indicated
the world's second largest economy may be stabilising after two
years of slumping growth.
"There are uncertainties in future prospects as the economy
is struggling with a difficult transition involving structural
rebalancing and revamping the growth model," said Belle, which
has a market value of $11.6 billion and manages more than 18,000
retail outlets across 360 Chinese cities.
"As a defensive reaction, consumers are becoming more
inclined to save and less willing to spend," it added.
Economists have long doubted the accuracy of official
economic data and this scepticism has increased as China plots a
course towards consumption-led growth. The official retail sales
measure, for example, counts a sale from when an item is
shipped, rather than when it is actually sold.
The latest data, however, supports retailers' complaints.
Retail sales grew 13.2 percent in July year-on-year, a
slowdown from 14.3 percent annual growth in 2012, and 17.1
percent growth in 2011.
"Consumer sentiment showed no sign of significant recovery,
affecting many businesses," said menswear retailer China Lilang
Ltd, which has nearly 3,500 stores across China.
This uncertainty about the future underscores the difficulty
both the government and retailers have to persuade consumers to
throw open their wallets in a nation with one of the highest
household savings rates in the world.
"The traditional retail industry has reached an inflection
point due to the combination of a variety of factors, including
slower economic growth, changing consumer habits and rapid
growth of e-commerce," said Lianhua Supermarket Holdings Co Ltd
, which operates more than 4,500 outlets across China.
"The increase in the overall savings rate indicates that
China still has a long way to go to transform into a
consumption-driven economy," it said in its earnings statement.
The personal savings of mainland households was about 38
percent of disposable income in 2012, according to economists.
The International Monetary Fund said China's urban household
savings rate was less than 20 percent of disposable income in
BUYING THE WAY TO RECOVERY
China's recently appointed leaders are trying to wean the
economy away from the credit and investment-driven growth that
powered its break-neck expansion for three decades to a more
sustainable model that favours domestic consumption.
Annual economic growth has slowed in nine of the past 10
quarters, hitting domestic as well as overseas firms such as
Apple Inc, but indications that the economy is now
stabilising should help drive Beijing's reform efforts and lift
Some firms are reporting upbeat sales. Tiffany & Co
said it was benefiting from a growing preference among Chinese
for diamonds over gold and luxury fashion house Prada said China
helped to lift its sales by 12 months in the six-months to July.
Chinese government-backed retailers like China Resources
Enterprise Ltd are also more positive about the future
than some of their private-sector counterparts.
"We are better equipped than ever to face the uncertainties
ahead and to capitalize on promising opportunities when they
arise," said the conglomerate, which operates China's
second-largest hypermarket chain and the mainland's biggest
Caution, however, still abounds.
Consultancy China Market Research Group recently polled
1,000 middle-class consumers who earn $6,000-$15,000 a year and
found that most people were worried about the future.
"Their sentiment and confidence is very negative from what
we found and so that is going to hurt some of the mid-tier
consumer retail brands," senior analyst James Roy said. "Their
confidence is sort of negative from the standpoint of low
overall investment in the economy, feeling negative about
slowing growth and uncertainties about the future."