American Companies Confident In China's Path to Reform AmCham Members' Investment Budgets Grow 40%, Reach $16.5 bn

Feb 26, 2013, 07:26 ET from AmCham South China

GUANGZHOU, China, Feb. 26, 2013 /PRNewswire/ -- The American Chamber of Commerce in South China (AmCham South China) today released its 2013 Special Report on the State of Business in South China and 2013 White Paper on the Business Environment in China.

"I think the key take away from our latest research is that private enterprises are 100 percent behind Mr. Xi and his colleagues in the Politburo," said AmCham South China President Harley Seyedin. "We all have tremendous confidence in the ability and dedication of these men as they guide China toward a brighter, more prosperous future."

The Special Report collects and analyzes the results of AmCham South China's nine-year-running study of companies' experiences in South China. This year, data showed that more than 80 percent of participating companies were primarily engaged in producing goods or services for the domestic Chinese market, rather than those in other countries. As late as 2006, a strong majority reported being engaged primarily in manufacturing for export.

Just under 90 percent of participants rank the business environment in South China as "Good/acceptable", "Very good" or "Outstanding"; meanwhile, roughly 47 percent of participants felt the business environment had improved over the past 12 months against 23 percent who felt it had worsened.

Investment budgets appear to be recovering from a multi-year slump which coincided with the worldwide economic slowdown; while 2013's 1-year budgets are only marginally higher than those recorded in 2012, participants report an overall 40 percent increase in 3-year budgets.

95 percent of participants reported either being profitable already or expecting to reach profitability within 2 years; of those already profitable companies, however, nearly 40 percent reported that they were not meeting budget expectations for profitability. This discrepancy, says Mr. Seyedin, is likely due to budget expectations only gradually accounting for increased competition in the maturing domestic market.

The lists of participants' major concerns at the present and over the coming three years continue to be topped by "Regulatory Issues (Chinese Government)," a result which is perhaps unsurprising given that the local regulatory environment for companies is the one most likely to have an impact on their operations. Other concerns include local competition, rising labor costs and difficulty with the availability of both skilled and generalist employees.

Another question, intended to track external risk, saw companies tagging "Increasing inflation" and "Increasing minimum wage standards" as the two biggest sources of concern for future operations. Equal numbers of participating companies felt appreciation of the RMB's value would have positive and negative effects on future operations.

Asked about the potential effect of the "Business Tax to VAT" program recently piloted in selected cities, 52 percent of participants felt it would improve their position while 19 percent felt it would have a negative effect on their operations.

The White Paper, now in its fifth edition, argues in favor of a new wave of economic reform aimed at stimulating the private sector and unlocking the innovative potential of China's as-yet small entrepreneurial community.

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

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 U.S. Chamber of Commerce in Washington D.C., AmCham South China represents more than 2,000 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 2012, AmCham South China hosted nearly 10,000 business executives and government leaders from around the world at its briefings, seminars, committee meetings and social gatherings. The American Chamber of Commerce in South China is a fully-independent organization accredited by the U.S. Chamber of Commerce in Washington, D.C. All AmChams in China are independently governed and represent member companies in their respective regions.

SOURCE AmCham South China



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