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US companies upbeat on China: survey

By Louise Ho (Global Times)

08:09, March 01, 2013

US companies are upbeat on business prospects in China in the next five years even though they made less profit last year and had difficulties in battling rising costs and observing regulations, according to a survey released Thursday by the American Chamber of Commerce (AmCham) in Shanghai.

In the 2012 Business Climate Survey, which polled 420 US companies, 73 percent said they made a profit last year, a decline of 5 percentage points from a year ago amid the slowing economy in China.

But 91 percent of the companies are still optimistic about their business development in China, up 5 percentage points from 2011, saying that the market offers great opportunities for them.

However, the companies also said they have encountered challenges in doing business in the country such as rising costs, particularly labor costs. A worsening regulatory environment is also one of the top concerns.

Jason Huck, senior vice president at HSBC Bank (China) Co, said the interpretation of rules and regulations is different at central and regional levels.

"This can make it difficult for US companies to come up with a solid platform for all regions," he said. He also urged the Chinese government to help US companies in dealing with the policies.

Enforcement of the regulations also favors local firms, according to more than half of the companies in the survey, 8 percentage points more than those who expressed the same opinion in 2011.

But Shanghai-based Kent Kedl, managing director for Greater China and North Asia at global risk consultancy Control Risks, said the speculation that local companies offer bribes may not be true.

"More often than not Chinese companies are not (giving bribes) or at least not more than others," he said, suggesting that American companies should get to know local areas and local officials if they want to have a bigger share of the China market.

Robert Theleen, chairman of AmCham in Shanghai, said US companies are actually more welcomed in China than in other countries in Asia such as Japan and South Korea. "US companies feel comfortable in China in how to build their business here," he told the Global Times.

Although doing business in China is getting more expensive, very few US companies have shut down their operations in the country, Kedl noted. "Some companies are moving to other places in China, and some will increase automation to fight costs," he explained.

US companies may encounter problems in China but the market has become necessary for their global expansion, with 75 percent of the companies surveyed listing China as the No.1 or one of the top three investment priorities.

China is currently in transition from an export-oriented economy to one based on consumption, driven by increasing household income.

"Consumers are going to buy more, which will be the main drive in China's economic development in the coming 10 years," said Control Risks' Kedl.

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