US companies' profits fatter in China market

15:53, February 10, 2011      

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For many American companies, the Chinese market has generated more profits than any other market. Most U.S.-funded enterprises in China were still making money even in 2008 and 2009, during the worst time of the global financial crisis.

China has become the most important market for 20 percent American companies in China, according to a recent report by the American Chamber of Commerce in Shanghai.

In this China Business Report 2010 – 2011, China stands at the top three choices of the global investment strategies of some 70 percent American firms with China operations. The survey finds that China’s economy is fueling the confidence of foreign enterprises operating in China and about 80 percent of American companies have the plan to increase their investment in China in 2011.

In 2010, 80 percent of American firms in China saw their sales and profits grow and 90 percent expressed confidence on the outlook of their China business.

Eric Musser, chairman of the AmCham Shanghai, believes that the importance of the China market for American companies and American economy would be further consolidated in the future as more American companies succeed in China.

Among the 346 respondents to the survey by the Amcham, about 80 percent said they would increase their investment in China. More than a quarter of the respondents have already made the plan to expand to China’s second and third tier cities. And 20 percent of respondents are making feasibility studies on new investment, which is 6.2 percentage points higher than in 2010.

In 2010, 87 percent of American firms have recorded sales growth, which is 40 percentage points and 10 percentage points higher than the figure in 2009 and 2008, respectively. In terms of profits, 79 percent of American firms reported profits, which is 14 percentage points and 9 percentage points more than the ratio in 2009 and 2008, respectively.

Up to 73 percent of the U.S.-funded businesses in China think their sales growth in China is stronger than that in global market. Only 19 percent said the two markets are at the similar level. In terms of the operating profits, 49 percent of American enterprises think they have made more profits in China than in the global market on average and 29 percent do not see much difference between the two markets in 2010.

Confidence prevails in American businesses in China for 2011. The survey finds that 89 percent of them predict that the growth of their operating profits would continue and 71 percent even expect more than 10 percent increase in their operating profits.

About 41 percent of American enterprises --- doubled compared with the figure in the survey a year ago --- are planning to make at least 15 percent more investment in China. At least 50 percent of investment increase is considered by 8.5 percent of American firms in China.

The United States has become the second largest export market and a major source of investment for China. At the same time, China has become the third largest export market and the fastest growing export market for the United States.

By Li Jia, People’s Daily Online


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