American companies revealed that they have tough times doing business in China recently. On top of the slowing economy growth in China, American companies also attributed their tough times on unclear laws by the Chinese authorities, industrial overcapacity, also on how they feel unwelcome in China.
American Chamber of Commerce in China conducted a survey called China Business Climate Survey Report in which they discovered that in addition to the economic environment, U.S companies are also concerned about inconsistent and unclear applications of regulations and laws, also rising labor costs.
According to The Washington Post, the survey also revealed that only 6 percent U.S companies characterize their financial performance in China as very profitable, compared to the 9 percent in 2013. Only 58 percent characterized it as profitable, compared to the 2014 number of 67 percent. The companies that reported their performance characterized as a loss and large loss rose 1 percent in 2015 compared to 2014.
When the companies were asked about whether they feel more or less welcome in China, the results are quite one-sided. 77 percent stated that they feel less welcome in China than before.
Other complaints from foreign companies, especially American companies also included rising labor costs, internet censorship, online controls, risks of data breaches, industrial overcapacity, also air pollution.
The economic slowdown in China, while not the top concern, is still something significant that foreign companies are taking into account. Reuters reported that data from China's statistics bureau showed that economy growth for 2015 was at its weakest pace in a quarter of a century at 6.9 percent. 2015 was also the year where China economy saw a slide in the currency, summer stocks crash, and huge outflow of capital.
The People's Bank of China forecast that the country's economic growth will slow to 6.8 percent in 2016. However, more companies seem to expect that the number will fall worse than the central bank's estimation. Almost half of the survey respondents believe that the GDP growth will grow even worse in 2016 at 6.25 percent.
Wall Street Journal reported that Chinese top officials said that they would protect the rights of foreign companies in the country. However, American companies revealed that they have regulatory and protectionist concerns while doing business in China. It's even cited as the top business challenge last year, according to the report by American Chamber of Conference in China.
The survey concluded that U.S companies are not feeling so comfortable doing business in China. The factors sum up to unwelcoming regulations, rising labor costs, industrial overcapacity, censorship, also air pollution. However, China remains a top investment priority for most foreign companies, compared to other markets. Still, the companies are taking into accounts the challenges as well as the slow economic growth they know they would face.
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