American Companies Enthusiastic About China's Path To Reform

GUANGZHOU, China, March 2, 2015 /PRNewswire/ -- The American Chamber of Commerce in South China (AmCham South China) today released its 2015 White Paper on the Business Environment in China and 2015 Special Report on the State of Business in South China.

The 300+ page White Paper, now in its seventh year, presents a highly-researched, exhaustively-cited account of the on-the-ground business environment in China and argues for the nation's leadership to "Keep moving forward and accelerate the pace" of economic reform.

According to the White Paper a critical question confronts the leadership at this stage: "Can Chinese leadership continue to press forward in aggressively tackling corruption while also fiercely undertaking economic reforms?" Its conclusion is that they must--they have to--and they should.

"I believe that our members are behind Chinese leadership 100 percent, and we are looking forward to seeing where the strong leadership takes the nation in the coming years," said AmCham South China President Harley Seyedin. "We have seen great things already, but we also believe that the next phase of economic reform stands to greatly benefit the China's economy and its hard-working citizens."

The 2015 Special Report on the State of Business, meanwhile, aggregates and analyzes the experiences of 275 of the companies who participated in the chamber's annual State of Business Study. This year 79.3 percent of participants reported that their primary business focus was providing goods or services to the Chinese market, while only 20.7 percent reported a primary focus of manufacturing for export.

Among its most significant results, the study shows that while members of the American Chamber of Commerce in South China--which collectively account for nearly 40 percent of all U.S.-China business, trade and investment--view the Chinese market's growth trends as highly positive they have reduced their reinvestment budgets for 2015 by 9.3 percent from the historic high recorded in 2014. Similarly, reinvestment budgets over the coming three years are down 16.9 percent. AmCham South China member companies stand to reinvest profits amounting to more than $12 billion in 2015.

Study results indicate that many AmCham South China member companies deferred reinvestments involving $250 million or more each due to concerns over regulatory changes, protectionist policies, transparency and unequal treatment. Specifically, although 8.4 percent of the chamber's members had entered 2014 with the intent to reinvest $250 million or greater each to expand their China operations, only 6.4 percent actually ended up doing so.

This is the first time in the 10-year history of the Special Report that at the end of the year companies have reported having reinvested less than they had originally budgeted.

Nevertheless, although 9.5 percent of participants had each budgeted to reinvest $10-50 million over the course of 2014, and 14.4 percent actually did so; similarly, while 5.3 percent had each budgeted to reinvest $50-$250 million, 9.4 percent actually reinvested amounts in that range. This suggests that although large planned reinvestments were called off or deferred, companies continue to heavily reinvest in their China operations.

This trend suggests that executives on the ground in China have a high level of confidence in the future of the Chinese market and are investing amounts within their decision-making ability. Executives at corporate headquarters in the West, however, appear to be deferring large investments which require their sign-off due to equal-treatment concerns.

44.4 percent of participants reported interest in investing in the newly announced Free Trade Zones located in South China.

Despite changes in reinvestment budgets, 85 percent of participants responded that they would rate the business environment in South China as "Good," "Very Good" or "Outstanding". Similarly, 83.5 percent of participants reported having hired additional employees to take advantage of the labor market; in total, the chamber estimates that this resulted in its members hiring 534,400 new employees across South China.

Top challenges that study participants expect to face in 2015 include "Regulatory issues," "Local competition," "Rising labor costs," "Lack of qualified managerial and specialist talent" and "Foreign competition".

Finally, only 4.1 percent of participants reported that a more freely-convertible RMB would negatively affect their China business and only 1.5 percent reported an expected negative effect on their global operations.

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 2,300 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 2014, 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.

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SOURCE AmCham South China

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