US firms foresee growth potential in China, expanding there: Survey

Around 78 per cent of the firms described themselves as either optimistic or slightly optimistic about the five-year business outlook, a return to the figures observed from 2015 to 2018.

More than 82.2 per cent of companies projected higher revenues in 2021 than in 2020, a return to revenue growth levels last seen before the worst days of the US-China trade war.

In 2021, the majority of companies (59.5 per cent) reported increased investment compared to 2020, up 30.9 percentage points, and near 2018’s 62 per cent.

Of manufacturers producing in China, 72 per cent had no plans to move any production out of China in the next three years. Of the remaining, 28 per cent that plan to move any production, only two companies (1.6 per cent) will move all production in the next three years. No companies were relocating their production from China to the United States.

Retaining local talent is getting harder as local companies offer more appeal. Around 55 per cent of respondents said that near-term and potential compensation at local firms was luring away Chinese talent, while 59.6 per cent agreed that Chinese workers were opting for local firms to seek better personal career advancement.

Slightly more than 26 per cent of companies said US-China tensions were negatively affecting their ability to attract or retain local staff.

Many US firms are still dealing with increased logistics costs, and in response, more firms are choosing to further localise their supply chains within China, Colin Block, managing director of US manufacturing company EVAPCO, told a panel discussion at the release event.

Panelists discussed recent challenges and opportunities in the China market and the need to adapt and localize to remain competitive.

As local firms continue to grow, Tom Tan, president of BorgWarner China, noted that multinationals can learn from their Chinese competitors about how to be agile in the market, while still maintaining the superior product quality that many companies pride themselves on.

“Local competition is not a surprise. Everybody has to wake up to the reality that there is competition on both sides and it’s something we have to deal with,” said Chris Reitermann, chief executive of Ogilvy Group Asia.

The panelists offered their thoughts on how firms should approach a China strategy, including to act with a local mindset. They also noted the importance of global headquarters’ trusting their China teams to understand the local market and execute company strategy, a press release from the chamber said.

This year’s report was based on the responses of 338 AmCham members to a survey conducted from mid-June to mid-July. Several industries were represented in the report, including automotive, education, logistics, manufacturing, pharmaceuticals, non-consumer electronics and retailers.

Fibre2Fashion News Desk (DS)