Can we stop doubting the Chinese consumer already? We have let the weaker auto sales cloud our judgment about what's selling and what's not.
I say that because last night's Nike (NKE) call made everyone who has been second-guessing those saying anything good about China look like total dopes. Listen to what Trevor Edwards, president of the Nike Brand, had to say: "In greater China, revenue was up an amazing 30%. Tremendous growth that again proves more than ever the success of our strategies." He went on to say: "These gains were driven by strong performance across nearly all key categories, including sportswear, running and basketball. For our wholesale partners like Bai Li, the doors that have been rep-profiled continued to outperform the rest of the fleet, driving expanded productivity and profitability. We also saw strong growth from our direct-to-consumer business driving by comparable store increases and an acceleration in our e-commerce business."
In other words, China's the strongest market for Nike in the world. It's only going to get better when Michael Jordan, a hero in China, goes to Shanghai next month to celebrate the 30th anniversary of the Air Jordan franchise. The company said it expects the "incredible" growth to continue for many years to come.
Let me ask you a question: Do you really need another pair of Jordans? How strapped can this nation of 1.3 billion consumers be if China's leading Nike sales, which are much stronger than they are in the United States?
Now I know there was tremendous skepticism about Apple (AAPL) iPhone sales in China until CEO Tim Cook emailed me to tell me about the acceleration of business and how strong it's been. Again, we are talking about the fastest growth of any region.
There were also raised eyebrows about how Starbucks (SBUX) could be saying business is so strong there and that CEO Howard Schultz might be too ebullient in his comments. (Apple and Starbucks are part of TheStreet's Action Alerts PLUS portfolio.)
I say that's poppycock. Auto sales may have peaked in the country. The stock market has hurt consumption in some areas. But the most expensive cup of coffee in China, the highest-end phones and the most exorbitant sneakers in the Nike family? Give me a break, this is real.
How can it be? First, I think the stock market is very limited there. It simply isn't the be-all and end-all of most individuals' wealth.
Second, the Chinese government has given the public multiple chances to get out of stocks at prices well above levels of a year ago. Sure, the millions of people who came in this year to try to cash in could be hurting. But how do we know? The accounts that were opened were sizable, but you could open five accounts, so we don't really have a clue how many are impacted by the decline.
Still, the most important thing to know is that you cannot judge this country's consumer by the Shanghai exchange because all three of these extremely discretionary items should have been the first to fall off. It's the opposite. Let's stipulate the consumer's spending is either going unabated or accelerating even as the industrial economy does seem hard-pressed to grow. It would be ignorant at this point to reach any other conclusion.