54% of American Companies Report Losing Market Share Due to Tariffs

GUANGZHOU, China, Feb. 25, 2019 /PRNewswire/ -- The American Chamber of Commerce in South China ("AmCham South China") today released its 2019 White Paper on the Business Environment in China and 2019 Special Report on the State of Business in South China.

The 521-page 2019 White Paper, now in its 11^th year, presents a highly-researched, exhaustively-cited account of the on-the-ground business environment in China. The 2019 Special Report, meanwhile, aggregates and analyzes the experiences of the companies who participated in the Chamber's annual State of Business study.

While 256 companies participated in the 2019 study in total, responses of 240 companies were finally adopted to ensure a high degree of data integrity. Participants in the Study include companies from the US, Mainland China, Hong Kong and Macao SARs, Taiwan, EU, Japan, Korea, Southeast Asia, Australia, New Zealand, and Canada.

The study sheds light on the impact of the trade dispute on the operation of business in South China as it was conducted shortly after the US and China announced a temporary 90-day ceasefire to deescalate trade tensions between the two countries.

The 2019 Special Report shows that many companies have taken advantage of the 90-day truce between the US and China, completing orders for rush delivery from the US and China. Those orders or deals account for 20 to 30 percent of the companies' annual numbers.

Forty percent of all the respondents report to have shifted some reinvestment from China to other markets in 2018 while 44 percent of all the foreign-invested companies report such shift, of which Asian countries are the biggest recipients.

The Special Report also suggests most business executives have had sufficient time to assess the present and possible future impact of the trade dispute on their businesses, and have increased their 2019 plans for reinvestments in the US and China accordingly.

"Companies which postponed their reinvestments in 2018 have increased their budgets for reinvestments in China in 2019 in order to keep up with customer demand - a need intensified by the postponement of their reinvestments in 2018," said Dr. Harley Seyedin, President of AmCham South China. Budgeted reinvestment from profits in China in 2019 by members of AmCham South China is expected to rise by a whopping average of 37.9 percent over 2018.

While fierce local competition, shortage of qualified personnel, and rising labor costs are the top three major challenges companies are facing in China, the top strategic reason for reinvesting in China is the potential growth of the local market. But unlike previous years, only 46 percent of the companies report Mainland China as their number one investment destination.

American companies report to continue being hurt the most as a result of the US and Chinese tariffs with 54 percent claiming to have lost market share to companies operating in other countries, while 33 percent and 20 percent of their counterparts from China and other countries operating in China present the same answer.

Apart from the combined tariffs, uncertainty of policies and regulations is the biggest non-tariff barrier companies confront in the US-China bilateral trade. The Chamber, thereof, calls for the establishment of a new judicial venue/vehicle where foreign companies can lodge complaints and where the oversight is designated by the central government just as it is with the IPR Courts. A large portion of problems foreign companies are facing in China are not related to central government issues, but as a direct result of unfair treatment by low-level municipal governments.

The Chamber suggests the China central government should create greater barriers that separate government-owned and partially-owned businesses from low-level municipal judicial systems. Seyedin said these judicial systems must be free from outside influences so that they are able to interpret laws and civil suits objectively and fairly.

About White Paper on the Business Environment in China and Special Report on the State of Business in South China

The White Paper on the Business Environment in China offers a summary of China's impressive accomplishments since China's "opening-up" and examines the key influences on the business environment in present-day China, such as national policy initiatives and the global economic crisis.

The Special Report on the State of Business in South China is a quantitative study of the business environment, conducted for consecutive years by AmCham South China. Each year, AmCham's member and non-member companies participate in AmCham's State of Business study, results of which will be garnered and edited into a separate publication.

Both documents may be downloaded free of charge from the chamber's website at www.amcham-southchina.org/amcham/static/publications/publications.jsp.

About The American Chamber of Commerce in South China

The American Chamber of Commerce in South China (AmCham South China) is a non-partisan, non-profit organization dedicated to facilitating bilateral trade between the United States and the People's Republic of China. Certified in 1995 by the US Chamber of Commerce in Washington DC, AmCham South China represents more than 2,300 corporate and individual members, is governed by a fully-independent Board of Governors elected from its membership, and provides dynamic, on-the-ground support for American and International companies doing business in South China. In 2018, AmCham South China hosted more than 10,000 business executives and government leaders from around the world at its briefings, seminars, committee meetings and social gatherings. AmCham South China is a fully-independent organization accredited by the US Chamber of Commerce in Washington, DC. All AmChams in China are independently governed and represent member companies in their respective regions.

For additional information, please contact:
Ms. Rachel Chen
Communication Manager
The American Chamber of Commerce in South China
Tel: 86-20-8335-1476 ext. 39
Fax: 86-20-8332-1642
E-mail: [email protected]

SOURCE AmCham South China