Fundamental Analysis of Companies' Dependence on Chinese Consumption
The Chinese market remains one of the key engines of growth for the global macroeconomy and consumer demand. With the world’s second-largest economy and a population exceeding 1.4 billion, China has long been the largest market for retail sales and smartphones. For instance, analysts have noted that for Apple Inc., the Chinese consumer market is its largest smartphone market, and a decline in sales in China immediately impacts the company's revenue. The slowdown in China's economic growth and the fall in consumer demand there lead to a decrease in corporate profits for many multinational companies. Collectively, the influence of Chinese consumption on global markets is significant: a decline in sales in China typically results in a drop in revenues and earnings forecasts for the corresponding companies on the stock markets of the U.S. and other countries.
Meanwhile, China is pursuing a policy of stimulating domestic demand. However, trade restrictions with the West and threats of a trade war increase investment risks. In such conditions, international investments become more cautious. Investors are closely monitoring changes in China's investment climate, as it directly affects project profitability and stock returns for foreign companies focused on the Chinese market. Increased market volatility amid news regarding the Chinese economy and politics forces investors to reassess portfolio diversification and global market entry strategies.
Key Companies with High Dependence on the Chinese Market (Apple, Tesla, Nike, Starbucks, Qualcomm, etc.)
-
Apple (AAPL). For the technology giant Apple, China has long been one of the primary drivers of iPhone sales growth. In the fourth quarter of 2023, Apple’s revenue in China fell by 13% year-over-year to $20.8 billion, attributed to strong promotions from local competitors and more subdued consumer demand. Additionally, about 80% of iPhones produced in the United States are assembled in China, reflecting Apple’s strong dependency on Chinese infrastructure for its production and logistics. All these factors render Apple’s shares sensitive to fluctuations in the Chinese market.
-
Tesla (TSLA). China is the world’s largest electric vehicle market, and Tesla has been actively ramping up production there (Gigafactory in Shanghai). For the first half of 2025, China accounted for the majority of Tesla’s sales; the company explicitly referred to China as "its largest market." In April 2025, sales of the Chinese-assembled Tesla Model 3 and Y fell by 6% compared to the previous year, reflecting heightened competition from domestic brands and geopolitical factors. As Tesla's growth has largely been fueled by Asian consumer demand, a worsening situation in China directly threatens its stock profitability.
-
Nike (NKE). The American sportswear manufacturer has long had a significant share of revenue from the Chinese market. For the 2024 fiscal year, the "Greater China" segment (mainland China and Hong Kong) contributed 14.7% of Nike’s revenue (compared to 42% in North America). However, in recent years, demand in China has decreased: from March to May 2024, store traffic for Nike in China fell by double digits. The reasons include the weakening Chinese economy and decreased demand for premium brands. These trends negatively impact Nike’s revenue and profitability, thereby affecting its standing in the stock market.
-
Starbucks (SBUX). The Starbucks coffee chain has dominated in China for a long time but has significantly lost ground to local competitors in recent years. In 2024, Starbucks’ revenue in China was about $3 billion, or roughly 20% of the company’s global sales. Meanwhile, the company's market share in China dropped from 34% in 2019 to 14% in 2024, due to the aggressive expansion of Luckin Coffee and other local brands. The decline in sales in China (marking the fourth consecutive quarter of falling sales by the end of 2024) was one of the reasons for Starbucks’ annual profit reduction and raised investor concerns.
-
Qualcomm (QCOM). Chipmaker Qualcomm is one of the prominent representatives of the technology sector that heavily depends on Chinese smartphone manufacturers. In the last fiscal year, approximately 46% of the company's revenue came from Chinese clients. Following a downturn in the smartphone market, Qualcomm reported a recovery: in the first half of 2024, sales of chips to Chinese OEM brands increased by 40%. However, any escalation in the trade war (e.g., new tariffs) poses a threat to these sales and could impact Qualcomm’s profits and those of other component suppliers.
-
Boeing (BA). Aerospace manufacturer Boeing is also significantly dependent on the Chinese market. Until recently, China was the largest source of new orders. However, following the announcement by the U.S. administration of 145% tariffs on Chinese exports, Chinese airlines received instructions to halt the acceptance of Boeing aircraft. This serves as a clear example of how political conflict (in trade relations) directly affects the revenue, profits, and stock prices of even such large corporations.
Apart from the listed companies, several other firms within the S&P 500 are also dependent on China (such as Qualcomm, NVIDIA, Adidas, General Motors, etc.). In all these cases, Chinese consumer demand constitutes a significant portion of their revenue, underscoring the role of the global Chinese market for the S&P 500 index as a whole.
Scenario Analysis: Full Decoupling, Partial Restrictions, Current Escalation
Let us consider several possible scenarios for the development of the situation and their impact on major companies and the market as a whole:
-
Full Decoupling (hard decoupling). In a hard scenario, the U.S. imposes additional tariffs on most Chinese goods, may cancel existing trade agreements, and intensify sanctions against Chinese companies. Such a policy effectively “severs” trade relationships, forcing companies to restructure their supply chains. According to S&P Global, in a "hard" scenario, the U.S. is prepared to impose new tariffs ranging from 104% to 145%. For companies, this would mean a sharp decline in sales in China, loss of markets, and decreased corporate profits. The S&P 500 index already demonstrates sensitivity to such news: in April 2025, the index fell by 18.9% from its peak and approached "bear market" levels, with the market capitalization of S&P companies losing approximately $5.8 trillion within a few days after the announcement of high tariffs.
-
Partial Restrictions. In a milder scenario, the U.S. maintains trade dialogue through existing frameworks, imposes selective restrictions (e.g., on critical technologies), and coordinates actions with allies. China responds in kind but does not initiate a full-scale trade war. In this case, the effect on the global market would be moderated: a decline in sales in China would be partially offset by growth in other markets, although the profits of many companies would still decrease. Increased international investments in alternative regions would partially compensate for losses, but tensions would remain. The overall economy would continue to operate under heightened market volatility, but collapse would not occur.
-
Current Escalation. This is the scenario we are witnessing in 2024-2025: a gradual tightening of restrictions in specific sectors without a complete halt to supplies. For instance, at the beginning of 2025, the U.S. administration introduces new tariffs and restrictions on the export of semiconductors and other high-tech products, and measures against Chinese companies come into effect. In response, Chinese authorities adopt similar measures (for example, temporarily suspending Boeing supplies). In this scenario, the market experiences short-term shocks, but a complete “decoupling” of the economies does not occur. Nevertheless, many companies are adjusting forecasts: it is already possible to speak of increased investment risks and rising volatility in sectors most sensitive to changes in trade relations.
Geopolitical and Tariff Risks
The current geopolitical tension in U.S.-China relations significantly heightens investment risks in global markets. New tariffs, restrictions, and export controls adversely affect corporate profitability. For example, the export restrictions introduced between 2022 and 2024 on advanced chips have led American semiconductor manufacturers to experience a decline in revenue. According to CSIS estimates, after the first rounds of restrictions, equipment and chip manufacturers in the U.S. and allied countries suffered significant income losses due to reduced Chinese orders. Analysts note that such policies may force China to further develop its domestic production capabilities (for example, through the "Made in China 2025" program), which in the long run creates even greater competition and inevitably impacts the profits of foreign companies.
Concurrently, China is making efforts to diversify its economy (in particular, "dual circulation," promoting the domestic market) and increase its independence from the dollar. The threat of congressional and administrative measures aimed at key sectors (e.g., new tariffs of 104-145% on trade with China) compels investors to consider the geopolitical factor as one of the primary risk variables. The current situation adversely impacts the investment climate: companies increasingly analyze scenarios of "supply chain diversification" and business redistribution, which in itself alters the landscape of global trade relations and international investments.
Technical Analysis: Market Reaction, Support/Resistance Levels, RSI and MACD Indicators
From the perspective of technical analysis, the current picture appears mixed. The short-term trend for the S&P 500 index remains moderately bullish, trading in the range of approximately 5600-5700 points. Technical indicators show a lack of clear overbought or oversold conditions. The RSI (14) stands at about 57.47 (above 55 indicates a bullish signal), and the MACD is positive (+43.65, also a bullish signal). Classical technical levels (pivot points) provide resistance at around 5711-5796, and support around 5626 and 5588 points. This indicates that the S&P 500 index is currently held at recent highs (resistance), with potential pullbacks to support levels in the event of any negative news. Overall, the high volatility of recent weeks is confirmed by the amplitude of price fluctuations, and trading on such swings is considered riskier today. Investors are advised to proceed with caution: while the technical bullish trend is maintained, any significant adverse news from China could trigger sharp corrections.
Conclusion Emphasizing Risks and Diversification
The dependence of the largest companies in the S&P 500 index on Chinese consumer demand creates significant risks for investors. Political or economic upheavals in China are immediately reflected in corporate results and market volatility. Scenarios of escalating trade wars demonstrate that without strategic redistribution of operations and portfolio diversification, many firms may face falling corporate profits and declining stock returns. In the current environment, it is crucial for investors to take both fundamental and technical factors into account. Investment strategies should focus on risk reduction: for example, diversification of the portfolio across sectors and regions, monitoring global trends and scenarios—all contribute to lessening dependence on a single country or industry. In an atmosphere of high uncertainty, global markets exhibit increased volatility; thus, careful analysis, asset balancing, and a nuanced assessment of macroeconomics and corporate fundamentals play key roles. Ultimately, it is through diversification and preparation for various trade relationship scenarios that investors can soften the blow to their portfolios and maintain investment performance over the long term.
