While firms surveyed by the American Chamber of Commerce China believe relations between China and the U.S. will improve, they feel they are less welcome and are concerned about the regulatory environment in China.
AmCham China conducted the survey between Oct. 23 and Nov. 26, 2017, in collaboration with Bain for data collection and analysis.
The survey was sent to 849 member company representatives, of which 411 completed a significant portion, said AmCham.
According to the survey report, 75% of members continue to feel foreign companies are less welcome in China than they have been in the past.
Although down from 55% last year, some 46% feel foreign companies are treated unfairly compared to local companies and, for the third year running, respondents cited inconsistent regulatory interpretation/unclear laws and enforcement as the top challenge to doing business in China, AmCham noted.
For the first time, compliance and enforcement made the list of the top challenges companies expect to face in 2018, the organization added.
Increased regulatory fairness, predictability and greater transparency are the steps respondents say would have the greatest impact on their level of investment in China.
Specific reforms members would like to see include greater access to officials and consistent implementation of national policies at the local level. Some 46%of respondents are confident the government will further open China’s market to foreign investment within the next three years, up from 34% last year.
US-Chinese relations to improve
In addition, some 36% of respondents believe relations between the two countries will improve this year, compared with 17% last year, possibly influenced by the perceived success of President Trump’s visit to China and that of President Xi Jinping’s earlier trip to the U.S., the organization noted.
For many member companies, 2017 represented a recovery in terms of performance. Some 64% of them reported revenue growth, up from 58 percent last year and 55 percent in 2015, survey results indicated.
Nearly six in 10 companies rank China among their top three investment priorities, up from the previous year but still below the historical average, AmCham said.
“There is cautious optimism that the ‘new normal’ rate of growth is sustainable for the foreseeable future, providing opportunities for business to expand,” said William Zarit, Chairman of the American Chamber of Commerce in China. “Nevertheless, the survey continues to paint a troubling picture of the regulatory environment in China. The best that can be said of this year’s data is that there appears to be a bottoming out of sentiment from the very low levels plumbed over the past few years.”
The survey also found:
- One-third of members plan to expand their investment in China by more than 10% in 2018
- 45% of respondents report domestic competitors are more attractive to job hunters, up from 36% last year
- Rising costs and changes in the regulatory environment are the prime reasons 23% of respondents say they have moved or plan to move capacity from China
- 67% of consumer companies see China as either the leading edge of digital technology in their field or more advanced than other markets