US companies bullish on China

Updated: 2015-03-05 11:42

By Yu Ran in Shanghai(China Daily USA)

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The healthcare industry has the highest level of confidence in the China market among US enterprises while the majority of them feel optimistic regarding their five-year outlook despite the economic slowdown, according to the 2015 China Business Report released by the American Chamber of Commerce in Shanghai on Wednesday.

The healthcare sector shows the optimism resulting from the growth of China's growing middle class, increasing urbanization, and Chinese government policy priorities and spending.

"The growth of population and the emergence of a richer middle class will enlarge our market with their increasing needs for high-quality medical treatment in the next five to 10 years," said Shirley Zhao, president of Allergan, a US healthcare giant that entered the China market over two decades ago.

The report is based on the results of the annual China Business Climate Survey, which began in 1999 and reflects the views and insights of 377 member companies.

Nearly one-third of US companies reported that China is their top global investment priority, while 96 percent of companies surveyed reported that they had maintained or increased investment levels in China operations in 2014.

"Competition is becoming more intense and China's economy is slowing down, but even at the current GDP growth rate, China will continue to offer many opportunities to American businesses," said Kenneth Jarrett, president of AmCham Shanghai.

There was no change in the ranking of top business challenges facing US companies with the top being rising costs, which increased from the previous year's 48 percent to 53 percent in 2014.

Over 90 percent of respondents indicated that rising costs was their number one business challenge, while the cost of labor remains the most significant concern, with 86 percent of companies reporting this as their primary cost issue, said the report.

"Many foreign companies in China are starting to find themselves 'stuck' between a slowing economy and a still-challenging commercial environment," said Kent Kedl, Greater China managing director for Control Risks, AmCham Shanghai's partner for the report.

Companies ranked the top regulatory challenge in 2014 as an unclear regulatory environment, with 78 percent of respondents claiming it had hindered their business in China. A total of 33 percent reported that a lack of regulatory transparency has held them back.

"Many companies are growing at a slower rate and still need to deal with the difficulties of the lack of transparency and corruption issues in China," said Kedl.