China is tougher turf for US firms
AmCham Shanghai finds smaller share of American companies profitable in China in 2012 but more optimistic about the mainland
The performance of US businesses in China declined for a second consecutive year in 2012 amid rising labour costs, tougher competition, and a slowing economy.
But, a record number of American businesses said they were optimistic about the outlook for China for the next five years.
According to a survey of 420 companies by the American Chamber of Commerce (AmCham) in Shanghai, 73 per cent of respondents were profitable last year, down from 78 per cent in 2011.
Playing down expectations for sustainable and rapid economic growth in China, AmCham Shanghai president Brenda Foster said: "Steadily rising costs, human resource constraints and an increasingly competitive business environment will be the rule rather than the exception in the years ahead."
Severe losses afflicted 5.1 per cent of the surveyed firms last year, up from 4 per cent in 2011.
Most of the business executives complained of China's opaque regulatory environment and bureaucracy, with 54 per cent of respondents saying a lack of transparency favoured domestic companies.
Beijing's calls to raise incomes for the underprivileged forced companies to give pay rises to their workers.