Login ID:
Partner Login
Contact Us : 7066511911

U.S. Companies Paring Investment Plans in China, Survey Says -- Update

18 Jan 2017 5:53 am
By Eva Dou 

BEIJING--More U.S. businesses are shelving investment plans in China, a survey says, as companies find themselves caught between hardening trade stances in Washington and Beijing.

The annual survey of members of the American Chamber of Commerce in China, released Wednesday, found that the percentage of companies that rate China among their top three investment targets fell to 56%, the lowest since at least 2009. Four out of five companies said they felt less welcome in China than before, nearly double the rate from three years ago.

The survey, which isn't scientific, was conducted online between Oct. 26 and Nov. 27. The results were calculated based on 462 responses from members of the chamber, which represents 900 companies in China, about 80% of which are American.

Because the survey began before the Nov. 8 election, it only partly reflects opinions on how President-elect Donald Trump will affect U.S.-China relations. But Mr. Trump's calls for steep tariffs on China have raised the specter of Beijing retaliation and given U.S. companies pause in deepening their investment in the country.

While 72% of companies said positive relations between Beijing and Washington were "very" or "extremely" important to their business growth in China, only 17% expected ties to improve over the next year.

"This is somewhat sobering," said William Zarit, chairman of the chamber. And "a growing majority feel that a strong bilateral relationship is important to their companies' success," he said.

The China investment environment has grown tougher in other ways. China's economic growth has slowed, production costs have risen and local rivals strengthened. Survey respondents said new cybersecurity rules and other regulations made it harder to compete against local companies. Choking smog in China's largest cities has also hampered recruitment of international executives.

China's top leaders have given public reassurances that they will treat foreign and domestic companies equally and let market forces play a larger role. But 55% of respondents said foreign companies were treated unfairly, and companies said that economic reforms were slower than expected.

The release of the survey came after Chinese President Xi Jinping defended free trade and globalization at the World Economic Forum in Davos, Switzerland. When it comes to those issues, Mr. Zarit said the chamber continues to see the U.S. and other countries he didn't specify as being more open than China. "I think that's kind of ironic."

The group said it is planning to reach out to the new Trump administration in February and that it would recommend the U.S. be more aggressive in talks with China amid "the increasing realization of an unfair playing field" that foreign firms face.

One bright spot was a rebound in revenue, with 58% of respondents seeing year-over-year sales growth in 2016, compared with 55% in 2015. This showed that U.S. companies are adjusting to the "new normal" of China's slowing economy, the chamber said.

"Now that they cannot count on double-digit economic growth to drive sales, companies are looking to grow by investing more in innovation in China and by branching out beyond core markets," it said in the report.

Companies rated the prosperous southern Guangdong province and the capital city Beijing as their top priorities for investment.

Chinese leaders pledged in December to open up to foreign investment previously restricted sectors, and the State Council, the cabinet, on Tuesday reiterated that commitment, saying foreign investment would be welcome in some financial services, manufacturing businesses and mining, among other sectors.

Write to Eva Dou at eva.dou@wsj.com

(END) Dow Jones Newswires

January 18, 2017 00:53 ET (05:53 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
Top 5 Special Reports
USD/INR (May 20) Consolidating in a Multi-Week Range...
Cotton Yarn Prices Set To Slide About 9%; Buying Oppor...
Indian COTTON Market intelligence and Price Outlook: F...
veg oil Complex Fundamental Analysis Report
Weekly: Pulses Drop On Listless Demand In Dals, Crop Ar...