Editor’s Note: CNN’s Meanwhile in China newsletter, which explores what you need to know about the country’s rise and how it impacts the world. Hong Kong CNN  —  For decades, Western companies made a fortune betting on the inexorable rise of the Chinese consumer. Now an economic slump and the emergence of ferocious local competitors means those bets look less safe as price wars erupt. Discounts and special deals are being offered across consumer brands from food and clothing to consumer electronics and cars, reflecting a dramatic shift in consumption patterns in the world’s second largest economy. One of the most intense price wars is raging in the electric vehicle (EV) industry, where a “life and death” race has manufacturers scrambling for survival. Tesla’s China market share shrank to 4% in April, almost halving from 7.7% in March, according to data released by the China Passenger Car Association on Friday. Deliveries from its Shanghai factory, its largest globally, fell 18% last month from a year earlier. The sharp drop contrasts with rising sales by its biggest Chinese rival BYD, which reported a 29% jump in pure EV deliveries. “Everyone has changed the way they think about China,” said Anne Stevenson-Yang, co-founder and managing principal at J Capital Research. “The business climate has changed entirely.” Last month, Tesla (TSLA) announced aggressive price cuts in the country, shortly after also reducing prices in the United States and Germany. The move added to a series of price reductions that it has made in its biggest overseas market since late 2022. Last year, the Chinese economy grew 5.2%. Outside the pandemic years, that was its slowest pace of annual expansion since 1990, when gross domestic product increased only 3.9% because of international sanctions following the 1989 Tiananmen Square massacre. Consumers have curtailed spending as their job and income prospects worsened. A prolonged crisis in real estate, which accounts for 70% of household wealth, and a stock market meltdown have added to their woes. Tesla CEO Elon Musk makes a surprise visit to China, it coincides with Beijing's auto show where reports suggest he is trying to export his company's self-driving technology. CNN's Marc Stewart has more.  Clipped From Video video Related video Elon Musk makes surprise visit to China, meets senior trade officials In the 1990s, “every company in the West” was hiring consultants and having boardroom meetings about how to do more in China, according to Stevenson-Yang. But now the consultants are gone and rather than talking about how to tap into rapid growth, the C-suite discussions are all about “getting out, protecting one’s operations or balancing supply among several countries.” “China now is somewhere around the status of a Brazil — big, important but difficult,” she added. The country’s economic woes aren’t confined to Tesla and the EV industry either. They’re hitting other American corporate giants like Apple (AAPL), Starbucks (STUX) and McDonald’s (MCD): all struggling to adjust their business strategies for a rapidly changing market. Discounted iPhones Worries about the future have forced Chinese consumers to be more budget-conscious, said Yang Wang, senior analyst for Counterpoint Research. As a result, purchases associated with premium or luxury have taken a back seat. People browsing Apple products at a Beijing flagship store on September 22, 2023. Kevin Frayer/Getty Images/File “Certainly Chinese consumers are experiencing ‘downgraded consumption’ in general,” he said. Apple’s overall revenue in Greater China — including mainland China, Taiwan, Hong Kong and Macao — fell 8% to $16.4 billion in the fiscal quarter ending March 30. Meanwhile, Huawei, a Chinese tech champion that the West once tried to kill off, has been advancing rapidly. Its smartphone sales soared 70% in the first quarter of 2024, boosted by the successful launch of its Mate 60 series, according to data compiled by Counterpoint Research. Customers look at new Huawei Pura 70 series smartphones, as the series models go on sale at a Huawei's flagship store in Beijing, China April 18, 2024. REUTERS/Tingshu Wang Tingshu Wang/Reuters Related article Huawei sales are soaring in China as Apple sinks “[China] is the most competitive market in the world,” said Tim Cook, CEO of Apple, at an earnings call with analysts earlier this month. He added that he continues to feel optimistic about the Chinese market in the long term. The US smartphone maker has cut prices for iPhones sold in China, which helped its shipments jump in March, according to data published last week by the China Academy of Information and Communications Technology, a government-backed research firm. It marked a turnaround from the previous two months of 2024, when Apple saw a deep slump in iPhone sales. The price reductions were led by Apple and third-party retailing platforms, with some iPhone 15 models offered at discounts of as much as 20%. Food fights Coffee chains have also scrambled to undercut each other’s prices. Last February, Cotti Coffee, a startup founded by two former Luckin Coffee executives, began a campaign to slash latte prices to as low as 9.9 yuan ($1.4). The move prompted Luckin, which is the country’s largest coffee chain, to match that price. Cotti then slashed latte prices again to 8.8 yuan ($1.2). The aggressive discounts have affected global brands. Even Starbucks, which had signalled it had no interest in a price war in China, started offering coupons that effectively lowered its latte prices to below 20 yuan ($2.8). They normally sell for 30 yuan ($4.2). YICHANG, CHINA - SEPTEMBER 23, 2021 - Customers are seen at luckin Coffee in Yichang, Hubei Province, China, Sept 23, 2021. Luckin coffee to settle with US investors. (Photo credit should read Liu Junfeng / Costfoto/Future Publishing via Getty Images) Liu Junfeng/Costfoto/Future Publishing/Getty Images Related article In China’s battle of the lattes, Luckin Coffee keeps beating Starbucks The average check paid by a Starbucks customer declined 9% in China in the first quarter of the year, mainly because of promotions and lower sales of higher priced merchandise, the company said. “Our consumers are now more cautious in their spending,” said Belinda Wong, chairwoman and co-CEO of Starbucks China, on an earnings call in January. “You see mass influx of mass market competitors focus on fast store expansion and low price tactics to drive trial.” Fast food chains have also gotten into the act. “Poor man’s deal” has become a trending term among Chinese youth since 2022. It initially referred to McDonald’s “1+1 = 13.9-yuan pair as you wish” $1.90 set meal, which was extremely popular among customers. Other Western fast food chains have subsequently jumped on the bandwagon, launching their own low-price set meals. Online guides for getting weekly fast food discounts have gone viral on social media. “Mondays at McDonalds for free McNuggets, Tuesdays at Tastien for a ‘one-for-one’ offer, Wednesdays at Dominos for 30% off, Thursdays at KFC for the ‘crazy Thursday’ deal, Fridays at Burger King for a half-priced weekday set deal, then heading to Wallace for the weekends. Repeat next week,” according to one guide. Nanchengxiang, a Beijing-based fast food chain, has even launched an ultra-cheap “ 3 yuan (41 cents) breakfast buffet,” setting a record low price for all you can eat meals. The set, dubbed by many netizens as “a must-have for poor people working in Beijing,” has more than doubled sales during breakfast hours, according to canyin168, a data tracking and analytical website in the catering industry. ‘No easy fix’ The “depressed” consumer sentiment is likely to stay for a while, said Yang from Counterpoint Research. Some Western brands “inevitably” will be forced to reconsider pricing to defend market share. However, that will be “no easy fix,” as foreign brands are at a disadvantage vis-a-vis domestic brands due to higher operating costs, he added. Pan Gongsheng, governor at the People's Bank of China (PBOC), speaks at the HKMA-BIS High-Level Conference in Hong Kong, China, on Tuesday, November 28, 2023. Anthony Kwan/Bloomberg/Getty Images Related article China will focus on ‘high-quality, sustainable growth,’ central bank chief says He doesn’t think they’re likely to pull out of the country though. Over the medium to long term, China is still set to drive global economic growth and contribute to the largest growing cohort of middle-class consumers. “With depressed economic prospects in most developed countries, and still some catching up to do for key emerging market growth markets like India, China could still offer the most lucrative market globally, even with depressed consumption levels,” he said. But expectations will have to be lowered. “I think the fundamental mistake that many Western companies made in China was to believe in the myth of a rising middle class,” said Stevenson-Yang. “In reality, Chinese people had a ton of money from capital gains in real estate and the stock market; They never had big increases in income. The economy is not reverting to the poverty levels of the 1980s, but there is a lot of dialing back being done.”