Warc, 1 March 2013
SHANGHAI: More than 90% of US firms are optimistic on their
medium-term prospects in China, despite ongoing challenges posed by the
bureaucratic and regulatory environment.
The AmCham Shanghai China Business Climate Survey polled 420
US companies with operations in China and found that while 91% were "optimistic"
or "slightly optimistic" about their five-year business prospects,
there had been a dip in profitability in 2012.
Some 73% of firms had profitable operations in China last
year, but this figure marked a drop from 78% in 2011 and 79% the year before. A
similar pattern was registered for margin and revenue growth figures.
"We should no longer expect China's economy to grow at
the same double-digit rates of years past," said Brenda Foster, President
of AmCham Shanghai, citing factors such as rising costs, human resource
constraints and the competitive business environment.
Nonetheless, she stated that "US companies remain
committed to the China market, which is critical to their global
strategies."
The survey also found that two-thirds of US companies were
"in China for China", and thus planning to compete in a growing
domestic market as the national economy increasingly moves away from relying on
low-cost exports.
Robert Theleen, Chair of AmCham Shanghai, noted: "While
European companies tend to dominate the luxury brand markets, the US has carved
out large parts of the rising middle-class branded consumer sectors and the
transition in China's market favours companies targeting this consumer
sector."
But there will be bureaucratic hurdles to overcome. More
than 60% of companies said the regulatory environment was either "not
improving" or "deteriorating," continuing a trend seen in
previous years.
Notwithstanding the various challenges they face, US
companies persist in seeing China as an investment priority, with most stating
they plan to make additional global investment in the Asian nation going
forward.
Data sourced from AmCham Shanghai; additional content by
Warc staff
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