US Firms Getting Optimistic About Business Growth in China: AmCham China

BEIJING, April 27 (TMTPOST) -- A majority of U.S. companies operating in China are expecting a turnaround in revenues in the next two years, according to asurvey released by AmCham China on Wednesday.

The survey, conducted last week as a follow-up to the 25th annual China Business Climate Survey (BCS) Report released in early March, intends to provide an update on the status of U.S. companies in China after the pandemic.

Compared to the previous survey, U.S. companies in China were more optimistic about their revenue prospects over the next two years. 59% of surveyed respondents were positive about growth in China's domestic market, while the percentage was 32% in the previous survey. And the proportion of members who showed the same attitude towards improving earnings in China climbed 4 percentage points to 37%.

At the report launch event, AmCham China President Michael Hart said member companies believed economic conditions are improving, but were still waiting to see if the recovery can be sustained.

The concerns about U.S.-China relations have risen recently. In the last survey, 73% of member companies were pessimistic about the bilateral ties, while the figure rose to 87% this time.

43% of the companies surveyed said their executives have been to China after December 2022. According to Hart, whether senior executives visit China is an important indicator of the prospects of U.S. companies’ investing in China.

In the survey, 73% companies said they would not move their supply chains outside China, compared with 23% who had considered or started to do so. 44% of respondents said risk management was the top factor for companies considering moving out. In addition, 27% said they had prioritized investments in other countries.

Rising U.S.-China tensions remained the top business challenge in 2023, with pandemic control measures and climbing labor costs no longer the top five challenges. According to Hart, there were many factors contributing to China’s competitiveness in addition to a large labor market and low labor costs.

China's policy environment and protectionism for local companies were among the top five challenges to doing business in the world’s second largest economy in 2023. Some U.S. companies had chosen other specific countries to reduce supply chain risks, according to Hart.

The 25th edition of the American Business in China White Paper, released on also on Wednesday,claimed that the lack of confidence in the bilateral relationship had heightened U.S. companies' concerns about investment and overall risk in China.

Covid-19 raises the bar of business travel for foreign companies. According to the survey, 51% of member companies said their overseas workers were willing to come to China, 68% considered more about tensions between the two countries or other geopolitical risks, and 44% said international flights were insufficient or too expensive.

Hart noticed that the pent-up demand for travel and visits was unprecedented as a result of the three-year pandemic. Currently, there are about 12 flights per week between China and the U.S., far less than the 400 flights before the pandemic.

The AmCham China is calling for more flights between the two countries and easier visas application and approval. Business travel and in-person meetings are very important, Hart noted. He will soon lead an AmCham China delegation to Washington, D.C., to provide U.S. officials with a realistic picture of how U.S. companies are operating in China.