One fifth of US firms in Shanghai redirecting investments away from China, says AmCham survey

One in five American businesses in Shanghai indicated in a survey that they are redirecting investments planned for China to other destinations, such as Southeast Asia, amid higher costs, fiercer domestic competition and a shortage of skilled workers.

According to the American Chamber of Commerce in Shanghai, the majority of its 400 survey respondents believe that the mainland government still favours local companies over foreign businesses.

The finding by the US business lobbying group added to evidence that the world’s second-largest economy is increasingly having difficulties attracting foreign investment despite the government’s efforts to widen market access and facilitate business operations for overseas companies.

About 84 respondents, or 20 per cent of the total participating in the chamber’s annual survey, said that they would redirect investment outside the mainland.

It was the first time figures about relocation plans have been published by the chamber.

Among the 84 companies that had plans to relocate – which included firms in the sectors of logistics, real estate, electronics, agriculture and chemicals – 29.4 per cent said they would redirect investment to Southeast Asia. The next most favourable location for redirected investment was the US (21.8 per cent) followed by South Asia (17.6 per cent), which includes India and Pakistan.