China Profitable as Business Climate Worsens, Amcham Says
More U.S. businesses in China said they were profitable last year even as they became increasingly pessimistic about the Chinese government’s commitment to improving market access, the American Chamber of Commerce in China said today.
Seventy-eight percent of member companies surveyed by Amcham said their China operations in 2010 were very profitable or profitable, the highest proportion in survey results dating back to 2002, the Beijing-based chamber said in its annual business climate survey. At the same time, 24 percent of respondents said China’s economic reforms had done nothing to improve the environment for U.S. businesses in the country, up from 9 percent who said the same in the previous poll.
The disconnect between performance and perception comes as U.S. companies, including Google Inc. (GOOG), say the Chinese government is making it increasingly difficult to do business in the world’s second-biggest economy. At the same time, the country’s rapid economic growth makes it an increasingly important market for companies such as General Motors Co. and General Electric Co.
“There are two themes to the data,” Amcham China Chairman Ted Dean told reporters in Beijing. “American companies are doing well and American companies are concerned about in some cases the current regulatory environment and in others the trend line for the regulatory environment.”
Eighty-three percent of Amcham China member companies plan to increase investment in the country this year, according to the survey, which used responses from 434 member companies out of a total of about 1,100 members. Some 85 percent of respondents reported increased revenue from their China operations last year. Sixty-three percent reported improved operating margins, compared with 44 percent who said the same of their 2009 results.
Seventy-one percent of the respondents said China’s business licensing process discriminates against foreign companies, according to the survey. More respondents -- 31 percent -- named bureaucracy as one of their top five challenges than any other issue, up from 23 percent in 2010.
Yao Jian, a spokesman for China’s Commerce Ministry, told reporters today in response to the Amcham survey that China will give equal treatment to foreign companies and further promote opening of the domestic market.
The survey’s results come after Google Inc. said its Gmail service is being blocked by China’s government in such a way that it is “carefully designed to look like the problem is with Gmail.” While the Gmail page is usually still visible within China, for at least two weeks users have had trouble accessing their accounts and sending emails from the site.
Dean said the Gmail blockage is a “cause for concern to our members and we’ve had members raise the issue already, so it’s something we’ll be following closely.”
--Michael Forsythe, with assistance from Regina Tan. Editors: Peter Hirschberg, Ben Richardson
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