US firms eye service, energy and high-tech sectors
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E-mail China Daily, September 8, 2015
Companies from the United States are looking to increase their investments in South China's modern service, energy and high-end manufacturing sectors as the nation transitions to a more moderate phase of growth, the American Chamber of Commerce in South China said on Monday.
According to the 2015 Special Report on the State of Business in South China, conducted by AmCham South China through the first half of this year, 79 percent of US companies in the region are currently providing services or goods to the Chinese market as their primary business focus instead of creating goods or services for export.
The survey interviewed 275 member companies, including joint ventures and wholly foreign-owned enterprises, on issues related to business outlook, investment climate and market conditions.
Harley Seyedin, the chamber's president, said the report's findings indicate that US companies are eager to strengthen their position in modern technology-driven manufacturing and services as China upgrades its industries.
AmCham South China represents more than 2,300 US and international companies doing business in South China's Guangxi Zhuang autonomous region as well as in Guangdong, Fujian and Hainan provinces.
According to the report, 85.3 percent of participants responded that they considered the overall business environment in South China to be "good", "very good" and "outstanding", a notable increase over last year's results.
Forty-two percent of participants reported that in their opinion the business environment has improved somewhat or greatly over the past 12 months, while 38.9 percent reported that it had remained about the same.
"Even though some media reported that foreign businesses are withdrawing from China because of the country's slowing growth, this isn't true. We haven't found a single member from our chamber that has left the country," Seyedin said.
The report found that regulatory issues are the largest impediment to massive investment across China. From the perspective of foreign investors, the lack of transparency or the perception of a lack of transparency will continue to limit the number and scale of investments.
"If foreign companies felt more confident that they would be treated equally from a regulatory standpoint, and if they felt they had better insight into the government's decision-making process, I am fully confident that we would see investment growth rapidly across China," said Tim Wen, the chamber's treasurer.
The report discovered strong reinvestment numbers across the board. Most participants reported investing more than they had originally budgeted for over the course of 2014.
"Although the total investment amount from chamber member companies have seen nearly a 10-percent decline from historic highs last year, we estimate that they stand to reinvest profits amounting to more than $12 billion in 2015 and more than $13.8 billion between 2015 and 2017," Seyedin said.
As has been the case in the past several years, AmCham South China expects one key area of investment to be human resources. More than 83 percent of polled participants reported having hired new employees to take advantage of the labor market. It estimated that this has led to the creation of 534,000 new jobs in China.
"As China moves up the value chain amid the new normal of slower, quality growth, the progress has reshaped many of global companies' business policies and investment strategies," said Zou Dongtao, director of the China Institute for Development and Reform at the Central University of Finance and Economics in Beijing.
Zou said the development of modern agriculture, new energy vehicles, aero-engines, green construction, high-end machinery, hydropower and wind power in China can benefit international firms as they are proficient in using green and high-tech technologies.
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