Member companies are preparing for a third straight year of slower economic growth in 2017, but many are finding ways to adapt and maintain profitability. Nonetheless, increasing numbers are deprioritizing China as a target for investment expansion. While both foreign and domestic companies feel the impact of slower economic growth, this year’s survey shows that AmCham China member companies are increasingly reconsidering their investments because of unfavorable regulations and other policy-related challenges. In this context, most respondents also believe that positive bilateral relations are critical for continued business growth.
2016 Performance Snapshot: Slightly better than 2015, but still below the long-range trend
Member companies in China continue to find growth and profits harder to come by. In 2016, 58% of survey respondents reported positive revenue growth in China, up from a low of 55% in 2015, but still far from historical levels of more than 70%. More companies also say that their China operations were profitable in 2016 (68% vs. 64% in 2015), but 80% say their margins in China are less than or only equal to their global average. In addition to slower market growth and domestic competition, they point to a host of barriers to doing business, such as unclear regulations, inconsistent enforcement, and rising labor costs.
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Source: Bain & Company – GAI