US companies upbeat on business outlook in China

According to the latest Annual Business Climate Survey from American Chamber of Commerce in China (Amcham China), more than 75 percent of respondents said they were optimistic about their companies' performance over the next two years. However, rising labor costs and Chinese economic slowdown have become their top business risks.

Two-year outlook is optimistic

A total of 325 U.S. companies have been surveyed by Amcham China. Over 75 percent of them said they have "optimistic" or "slightly optimistic" outlook in the business in China.

Over 40 percent of the respondents said operating margins in China are better the global average for their company. This is largely unchanged from the previous year, showing that China still retains a profitable environment compared with other economies, although they are experiencing declining revenue growth rates.

Rising labor costs become top business risk

The survey shows that U.S. companies continue to increase investment in general. 68 percent of respondents named China at as their top-three investment priorities.

Not all business indicators remained as positive. Expectation of investment growth moderates. It reflects both the leveling off of China's rapid growth and the fact that many international companies already have a substantial presence in China.

For the first time "labor costs" have become the No.1 risk faced by the companies surveyed, and shortage of qualified employees and managers ranked third and fourth, highlighting the tightening labor market.

It should also be noted that Chinese economic slowdown remained the biggest concern, while worries about the global economic slowdown declined to pre-global financial crisis levels.

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