China’s infrastructure spending is a boon to consumer businesses, says Yum China CEO

by Dramelin 12:00 AM 0 comments

Rising consumer spending in China has boosted sales of retailers, but it is the country`s infrastructure spending that gives businesses opportunities to expand, said the chief executive of China`s largest publicly held restaurant operator.
Micky Pant, chief executive of Yum China, told CNBC`s "Squawk Box" Monday that infrastructure is a reason why the company — which operates brands such as KFC and Pizza Hut — is aiming to open 600 new stores this year.
"For us, what`s very important is infrastructure spending because that`s how we get new malls, new trade zones, new high speed rail stations, new airports and that`s continuing at the fastest rate in China compared to any other country in the world.
That`s how we build 600 restaurants a year because these opportunities are emerging," he said.
Pant`s comments came ahead of the release of China`s latest economic data.
Official statistics showed Monday that retail sales in the world`s second largest economy grew 10.
9 percent year-on-year in March, beating Reuters forecast of 9.
The better consumer consumption growth was behind Yum China`s surprise first quarter performance as well.
The company reported earlier this month a 1 percent rise in same-store sales, beating analysts` estimate of a 0.
Pant said China`s economic transition into a consumer-led growth model, and the government`s continued reforms, will boost the company`s prospects in the years to come.
He singled out the country`s tax system overhaul in May last year, which replaced a revenue-based tax with a levy on the business` value-add, such as the difference between wholesale and final sales prices.
The move will help stabilize China`s economic growth and help the country`s rebalancing efforts, China`s finance ministry said when the shift was announced last year.
"It actually simplified things for us dramatically and given us a lot of operating relief and margin relief as well.
It`s been very good for the industry.
So steps like that, I think, will continue to stimulate the consumer economy," said Pant.
"We have 7,500 restaurants (in China) but I keep reminding people that we have double that number in the United States.
And the U.
is a smaller country than China in terms of population and future GDP.
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