Annual Survey Finds Growth in China Tempered by Costs,  

IPR Enforcement, Competition

      

  This week the U.S.-China Business Council released the results of its annual survey on the business environment in China finding that while China continues to deliver sales growth and profitability for U.S. companies, rising costs, increasing competition and persistent market access and regulatory barriers are tempering the optimism of U.S. companies doing business there. Highlights of the report's findings include:

 

- 94% of companies say they are doing business in China primarily to access that country's market, not to develop an export platform, and 66% plan to increase investment in China in the next 12 months

- 89% of respondents said their China operations are profitable, two-thirds said revenue from those operations grew 10% or more in the past year, and 75% said profit margins from those operations were the same as or better than their global margins

- 90% of respondents said they are optimistic or somewhat optimistic about business prospects in China over the next five years, but 45% said they are less optimistic than three years ago

- Competition from domestic competitors was cited as the primary restraint on increased profitability in China by 27% of respondents, followed by rising costs (20%), government policy and regulation (17%), competition from international competitors (15%), insufficient personnel to support growth (7%) and insufficient capacity to meet demand (6%)

- 17% of respondents said they reduced or stopped planned investment in China in the past year, and 50% of those cited market access restrictions as the reason

- The top 10 challenges identified concerning doing business in China were talent recruitment and retention, administrative licensing, competition with Chinese enterprises, cost increases, intellectual property rights enforcement, uneven local enforcement and implementation of laws and policies, investment restrictions, competition with foreign companies in China, competition with foreign or Chinese companies not subject to the Foreign Corrupt Practices Act, and standards and conformity assessment

- China's exchange rate was not among the top 25 concerns listed by U.S. companies doing business in China, and forced transfer of technology ranking 16th     

 

 

© 2012, Sandler, Travis & Rosenberg, P.A. Originally published in the Oct. 12, 2012, issue of the Sandler, Travis & Rosenberg Trade Report (http://www.strtrade.com/publications-subscribe.html). Reprinted by permission.