According to the study “AmCham 2023 China Business Report” of the American Chamber of Commerce in Shanghai, most American companies operating in China plan to increase their investments in this country. Despite challenges specified as increasing competition from Chinese companies, rising costs and political uncertainty, American companies inactive see advanced growth possible in the Chinese market.
The survey, which was the basis for the report, was conducted among over 300 US companies operating in the PRC and showed that 52% of them are planning to increase their investments in the mediate State this year. Only 22% of companies plan to reduce their investments.
These are any of the most crucial challenges facing American companies in China:
- Increasing competition from Chinese companies: Chinese technology companies specified as Huawei and Tencent are becoming increasingly competitive towards global corporations. In the hardware, software and technology sector, 32% of US companies consider the increase in competition from Chinese companies to be a major origin affecting their business activities.
- Increasing costs: Labour costs in China are rising at around 7% per year. 25% of U.S. companies consider rising costs to be a major obstacle to Chinese operations.
- Political uncertainty: The tensions between the United States and China and the changing regulatory framework make uncertainty for US companies operating in China. 33% of American companies believe that political uncertainty is simply a serious origin affecting their business activities.
To address these challenges, US companies usage different strategies, including:
- Location of products: American companies adapt their products to the local preferences of Chinese consumers.
- Investment in R & D: American companies increase their investment in R & D in China to be competitive with Chinese companies.
- Diversification of supply chains: American companies diversify their supply chains to reduce the hazard of disruption caused by trade conflicts or another factors.
Despite challenges specified as increasing competition from Chinese companies, rising costs and political uncertainty, American companies inactive see advanced growth possible in the Chinese market.
42% of R&D firms in China are determined to increase their investment in this area. This is simply a clear signal that American companies are inactive planning to invest in innovation in China. The Chinese government supports R&D improvement by offering companies grants and taxation breaks.
However, American companies fear regulatory uncertainty. 70% of respondents indicated that data location and cybersecurity requirements are a major challenge. 84% of companies in the hardware, software and technology services sector study increased uncertainty.
American companies are besides afraid about protecting intellectual property. 41% of respondents indicated that this problem was serious to them.
American companies call on the Chinese government to supply a clear, long-term political trajectory for business regulation. They besides want the government to clearly inform about policy changes and supply a solid framework for businesses to decision after regulatory changes.
Although American companies face challenges in China, they inactive see advanced growth possible in this market. China is the largest consumer marketplace in the planet and their economy is the leading economy of east Asia. American companies that will be able to adapt to a changing business environment will have good prospects for success in China.
Source: gov.cn; amcham-shanghai.org
Author: 梁安基 Andrzej Z. Liang, 上海 Shanghai, 中国 China
Email: [email protected]
Editorial: Leszek B.
Email: [email protected]
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