Appetite declines for retail therapy

By John Liu  |   2008-6-7  |     NEWSPAPER EDITION

SONY Corp and Sharp Corp said sales in the Chinese mainland may slow after the country's devastating 8.0-magnitude Sichuan earthquake sent the nation into mourning, discouraging purchases.

Sony's camera sales are running 20 percent below estimates and it has scaled back projections for Bravia TVs, Haruyasu Nagata, the Tokyo-based company's president for the Chinese mainland region, said three weeks after the earthquake that killed more than 69,000 people.

"This kind of mixed feeling is creating difficulties for us to do business in June and July," Nagata said in an interview in Shanghai with Bloomberg News.

China declared three days of national mourning in the wake of the earthquake in Sichuan Province.

"Chinese people are going through a soul-searching period after the earthquake and that may have a cooling effect," said Andy Xie, founder of Rosetta Stone Advisors in Shanghai and formerly Morgan Stanley's chief Asia economist in Hong Kong.

Osaka-based Sharp Corp, Japan's biggest maker of liquid crystal displays, also said it expects sales to be affected. "The entire nation is now in a mourning mood," said Miyuki Nakayama, a Tokyo-based spokeswoman.

China's electronics sales may have fallen 10 percent in May from April because of the quake's impact on consumer spending, said Kevin Wang, a Shanghai-based analyst at researcher iSuppli Corp.

Retail sales in the world's fastest-growing major economy probably slowed last month after surging the most since 1999 in April, based on economists' estimates compiled by Bloomberg News.

Sony, which forecasts China to overtake Japan as its second-biggest electronics market this fiscal year, is delaying promotional offers for LCD TVs as charities across China raise money for earthquake survivors and reconstruction, Nagata said. He declined to comment on how long the quake may affect consumer spending.

Best Buy Co, the biggest United States electronics chain, postponed plans to bring Japanese all-girl band Morning Musume to China for a concert to June, said Phil Zhang, a Shanghai-based spokesman for the retailer.

"We had to consider the emotional mood of the public," Zhang said.

Still, Sony expects to sustain the more than 30 percent growth in overall China sales it had in the last fiscal year.

Digital-camera sales in China rose 30 percent last year to 8.37 million units, while LCD TV sales rose 83 percent to 8.8 million sets.