China Continues as an Attractive Investment Destination

GUANGZHOU, China, Feb. 26, 2025 /PRNewswire/ -- The American Chamber of Commerce in South China (AmCham South China) today released its 2025 Special Report on the State of Business in South China. The release was attended by over 200 government officials, business executives and members of media including over 40 foreign consulates mostly represented by their consuls general. This publication can be downloaded free of charge from the Chamber's website at http://www.amcham-southchina.com/amcham/static/publications/specialreport.jsp

The 208-page bilingual 2025 Special Report on the State of the Business in South China, the 21^st such endeavor, provides a comprehensive and quantitative analysis of the business community and valuable insights into the development trends in South China. This year, 316 companies participated in the study in total. This publication is researched and produced independently by AmCham South China and does not represent the opinions of the US or any other government or organization. AmCham South China does not receive any funds from any government in the production of this publication.

According to the 2025 Special Report on the State of Business in South China, 76% of the companies studied plan to reinvest in China in 2025. A sizeable number of the participating companies have budgeted for reinvestment in China in 2025 under US$10 million, accounting for 77% of the total. A notable 6% have allocated over US$250 million for reinvestment plans in the coming year. It is estimated that member companies have set aside a total of US$14.59 billion from profits in China to reinvest over the next three to five years to expand existing operations and capture additional market share, a surge of 33.18% compared to the previous reinvestment figure.

Dr. Harley Seyedin, Chairman and President of AmCham South China, winner of 2017 Oslo Business for Peace Award (along with Elon Musk, Durreen Shahnaz and Murad Al-Katib), which is awarded by an Award Committee consisting of Nobel Laureates in Peace and Economics, said, "Businesses are increasing their commitments in China to secure a stronger foothold in this critical market. The reinvestment surge signals confidence in China's future, and their hope for US-China increased cooperation." Dr. Seyedin continued, "Since nearly 75% of American companies in China are primarily focused on importing components from the US to produce goods and services in China for China, they believe that continued reinvestment in China is essential for their long-term success."

In 2024, China achieved a GDP growth rate of 5% and a total GDP of RMB 134.91 trillion (US$18.80 trillion). This robust economic performance continues to attract global investors, with 39% of the companies studied ranking China as their top investment destination and 58% of foreign companies placing it among their top three global investment priorities. The 2025 Special Report further highlights strong investor confidence, as 73% of the participating companies report a positive or very positive overall return on investment in China in 2024, while 39% enjoy a higher return on investment in China than in other global markets.

Key Takeaways of the 2025 Special Report on the State of Business in South China:

• The proportion of companies that gained over 60% of their global revenue from China has risen by 5 percentage points (pp) to 31%.
• 47% of the companies studied experienced a significant or slight increase in revenue in China. A larger share of American companies (43%, +7pp y-o-y) and manufacturing companies (47%, +17pp y-o-y) experienced revenue growth.
• In 2024, overall profitability declined, with 85% of companies reporting profitability in China, a 3pp decrease compared to the previous two years.
• Concerning the companies that are profitable in China, 45% reported to have met their budget expectations. Among companies yet to make profits in China, 88% expect to reach that milestone within two to five years. Only 8% anticipate it will take more than six years.
• In 2024, 57% of the companies studied remain optimistic about their business prospects in China, a 5pp decrease from the previous year. American companies' confidence dropped by 14pp, while the manufacturing sector saw the steepest decline, with an 18pp drop in optimism.
• In 2024, 61% of the companies studied reported to have reinvested in China, marking a 5pp decline compared with the previous year. The reinvestment trend remains consistent for American companies, with 57% reporting to have actually reinvested in China, in line with last year's figures.
• 3% of the companies studied had each budgeted to reinvest US$250 million or more in China in 2024, while this year's findings reveal that 7% had actually followed through with reinvestments of this magnitude.
• 59% of the companies studied have plans to expand their operations in China over the coming three years.
• Guangzhou has been ranked as the top investment destination in China for eight consecutive years, followed by Shenzhen, Shanghai, and Beijing.
• Fierce local competition remains the greatest challenge faced by the companies studied in South China, followed by rising labor costs and rising operation costs.
• Not a single company indicated a complete withdrawal from the Chinese market. 91% of the companies studied assert that they will not decouple from the Chinese market due to the US-China trade tensions, a 5pp increase from 2023.
• One quarter of the companies studied are bullish about the US-China relations in the coming year, a significant decrease of 19pp compared to previous assessments.

The negative effects of both US and Chinese tariffs on the companies studied have been somewhat alleviated. Many companies have found ways to mitigate the impact through supply chain adjustments, strategic sourcing, or absorbing some of the tariff costs.

Dr. Seydin remarked, "American companies have long recognized the importance of the strong economic relationship between the two countries, and they remain committed to the mutual benefits of innovation, job creation, and cultural exchange that this partnership fosters. It is essential that both governments work together to create a more predictable and supportive trade environment where American businesses can continue to thrive and contribute to the long-term economic growth of both countries."

Special Report on the State of Business in South China

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.

The document can be downloaded free of charge from the chamber's website at http://www.amcham-southchina.com/amcham/static/publications/specialreport.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. Accredited 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. Over the past decade, AmCham South China has hosted on average each year more than 10,000 business executives and government leaders from around the world at its briefings, seminars, committee meetings and social gatherings. All AmChams in China are independently governed and represent member companies in their respective regions.

SOURCE The American Chamber of Commerce in South China