In the face of the global economic downturn and ongoing market challenges, a majority of American companies continue to see revenue and profit growth and rank China as a top investment destination for 2010, according to the 2009 China Business Report, released today by the American Chamber of Commerce in Shanghai (AmCham Shanghai).
Based on a survey of 369 American companies with operations in China, the AmCham Shanghai Report finds that a record 90% of surveyed companies have an optimistic business outlook on the China market. As one the longest running surveys of American companies in China, the China Business Report also tracks the continuing focus of American companies on serving China’s domestic market as their primary strategy in China and their commitment to second- and third-tier cities.
"AmCham Shanghai has conducted this survey every year since 1999 and I’m proud to say optimism has never been higher, said Brenda Foster, president of AmCham Shanghai. "China is a top 3 investment destination for most American companies in China and a majority is focused on competing in China’s growing domestic market. We're looking forward to an exciting 2010."
"American companies are finding that their performance in China is the bright spot in an otherwise difficult global picture," stated J. Norwell Coquillard, chairman of AmCham Shanghai. "This year's Report offers businesspeople, policymakers and opinion leaders a valuable resource for better understanding the China market which is sure to play an even larger role in the world economy for years to come."
Among the study’s key findings:
The global economic downturn impacted American companies in China influencing revenue and profit growth.
- The number of American companies who saw a decrease in revenue jumped to 39%, the largest number since 1999.
- The number of companies reporting that profits remained flat or dropped increased to 36%, the largest percentage since 2002.
But American companies continue to grow, albeit at a slower pace.
- 66% said that their operating margins in 2009 were equal to or better than in 2008
- 65% said that they are "profitable" or "very profitable" in 2009
- 58% said that they had increased their China investment in 2009 from 2008
China was a "bright spot" in an otherwise bleak global picture.
- 41% reported higher China operating margins than worldwide margins, up from 33% last year
- 60% reported that the crisis had a bigger impact on global operations than China, while only 19% said that the impact was greater in China
A majority of respondents are "in China for China" and focused on competing in China's growing domestic market.
- Respondents who are in China primarily to produce goods and services for the China market jumped to 59% from 39% last year, by far the largest increase since 2006.
- At the same time, those in China primarily to export to the U.S. market dropped to 16% in 2009 from 21% in 2008.
- Those companies that focused on the China market were less likely to be negatively impacted by the global downturn.
An overwhelming majority of American companies in China have an optimistic long-term business outlook on the China market and are predicting a positive 2010.
- 90% were "optimistic" or "slightly optimistic" about the 5-year outlook, compared to 81% in 2008.
- 82% forecast 2010 revenues to be higher than 2009
- 74% rank China as a top-three investment priority, nearly 20% rank it #1
- 64% have plans to increase China investment in 2010 and only 5 percent are planning to decrease investment
AmCham Shanghai was pleased to work with supporting partner Technomic Asia, a Shanghai-based market growth strategy and supply chain consulting firm, on the 2009 China Business Report. Technomic Asia assisted in the development of the survey and analysis of the results.
Kent D. Kedl, vice president and general manager of Technomic Asia observed, "In this bleak global economic climate, global companies are searching for growth and finding it in China. Companies who are already here and focused on the China market were not only less likely to have been impacted by the downturn, a majority are expanding their China footprint and developing new markets."
About the 2009 China Business Report
The 2009 China Business Report highlights the results of the 2009 China Business Survey, a comprehensive survey of AmCham Shanghai member companies. First launched in 1999, The 2009 Survey builds on the results of ten years of AmCham Shanghai's China Business Surveys. The survey was conducted in October and November of 2009 and polled 369 AmCham Shanghai member companies, all of which are U.S.-based companies with operations in China. The AmCham Shanghai China Business Survey is one of the longest running surveys of American companies in China.
About the American Chamber of Commerce in Shanghai
The American Chamber of Commerce in Shanghai, known as the "Voice of American Business" in China, is the largest and fastest growing American Chamber in the Asia Pacific region. Founded in 1915, AmCham Shanghai was the third American Chamber established outside the United States. As a non-profit, non-partisan business organization, AmCham Shanghai is committed to the principals of free trade, open markets, private enterprise and the unrestricted flow of information.
AmCham Shanghai's mission is to support the success of our members by promoting a healthy business environment in China, strengthening U.S.-China commercial ties and providing high-quality business information and resources.
Visit www.amcham-shanghai.org for more information about AmCham Shanghai.
About Technomic Asia
Technomic Asia is a Shanghai-based market growth strategy and supply chain consulting firm. Technomic Asia has been in China since 1985, one of the first foreign consulting firms licensed to practice in China. Technomic Asia works across multiple industries and have completed over 800 assignments throughout Asia.
For more information about Technomic Asia go to www.technomicasia.com or send an email to firstname.lastname@example.org.