Survey: US companies optimistic with China biz in 5 yrs

(Xinhua)
Updated: 2009-03-10 21:57

BEIJING -- The American Chamber of Commerce in China (AmCham-China) announced results of its 2009 Business Climate Survey Tuesday, with 52 percent of the respondents optimistic and 29 percent of respondents "slightly optimistic" with the five-year outlook for their business in China.

About 74 percent of the respondents, most of which are American companies in China, reported a profitable 2008, almost consistent with the situation in 2007, according to the survey of more than 400 member companies of the Chamber.

With regards to expectations for American businesses in China this year, the AmCham-China told an audience of more than 130 AmCham-China members that it would face both opportunities and challenges.

Due to the financial crisis, only 31 percent of respondents hold optimistic attitudes toward the one-year outlook for business in China.

However, China's large market - especially in the rural areas - still provides opportunities for American companies, said James McGregor, former chairman of the AmCham-China.

According to the survey, 61 percent of respondents do not plan to change investments in China, whereas 37 percent of respondents are postponing planned investments and 2 percent of respondents have canceled investments.

People are not likely to invest more when economic performance is bad, but the current situation provides the best opportunity for foreign companies to invest in China, said McGregor.

When some fields of business are impacted by the crisis, it opens up opportunities to explore several new areas, he said, noting there would be commercial potential in fields such as automobiles, environment protection and vicarious energy for the Chinese market.

As to expansion to second- and third- tier cities in China this year, the survey shows 15 percent of respondents are likely to set up sales or manufacturing operations in "one or two new cities," 8 percent plan to establish regional networks in "several provinces" and 1 percent plans to open offices in "more than 10 new cities."

Though 22 percent of respondents voted China as a number one priority in near-term global investment plans, a number that reflected a 29-point drop compared with 2007, companies choosing China as a top-three global investment priority took 56 percent of all the respondents.

Although rising cost pressures brought challenges to the business of foreign companies in China, it could not be used as a reason for these companies to withdraw from China's market, said Ted Dean, president and managing director at an advisory firm BDA China.

The respondents also voted on the top 10 business challenges for their operation in China. Challenges included management-level human resources, inconsistent regulatory interpretation, bureaucracy and unclear regulation.