Key challenges persist – rising costs and competition for talent rank as top challenges while companies report little improvement in China’s regulatory environment.

“US companies are realizing gains after years of investment in China. That’s the good news. But China is a tough place to do business, it always has been, and this year’s China Business Climate Indices quantify that” said Kent Kedl, Managing Director, Greater China and North Asia, Control Risks.

Three years after the global economic downturn, U.S. Companies in China continue to report positive financial performance even as they contend with rising costs, increasing competition and an uneven regulatory environment, according to AmCham Shanghai’s 2011–2012 China Business Report released February 15th at the Four Seasons hotel in Shanghai.

Highly profitable, getting mature, the Chinese market is facing new challenges for 2012 and its main partners have to deal with it.

–      78% of the more than 300 companies surveyed report they are “profitable” or “very profitable,” However, companies need to stay more than 5 years to reach this level of profitability.

–       Revenue growth: 80 percent of companies report revenue growth in 2011 over 2010.

–       66 % of companies report their revenue growth in China exceeded that of their operations worldwide.

–       62% report they import parts or finished goods from the U.S. into China to support their operations here, an increase from 2010

–       U.S. exports make up 32 % of their China sales by value.

Results indicate that U.S. companies in China are increasingly driving U.S. exports to serve the China market supporting production and jobs at home. US companies in China are driving US exports.

They remain committed to competing in the China market, but less optimistic about their business prospects in China compared to the preceding year.

A stand-up market

China is not anymore a place to produce at lower price for local market but considered as main market for most of the companies producing there:

–       58 percent of the companies produce goods or services for China as their primary strategy

–       71 percent of companies sell and support products and services uniquely designed for the China market

–       90 percent have expanded their operational footprints in China to include sales offices and research and development centers (R&D), in multiple locations outside Shanghai

–       80 percent report “high” or “moderate” priority for staff localization

–       61 percent report “high” or “moderate” priority for manufacturing localization

China has become an essential market for multinationals, going beyond a mere supportive role for companies’ worldwide operations. In 2011, two-thirds of the companies report their revenue growth in China exceeded that of their operations worldwide.

Extract from the American Chamber of Commerce in Shanghai and foreignentrepreneursinchina.com

– See more at: http://www.sbeintl.com/

Don't be shellfish...