American companies in southern China are operating profitably and plan an aggregate 20 per cent increase in investments over the next three years to expand their operations in the region despite a sluggish world economy, according to the American Chamber of Commerce in South China.
In a special report on the state of business in southern China released yesterday, the Guangzhou-based Chamber said about 90 per cent of US companies in the region that participated in the study reported they were either profitable, or would be within two years.
The most important reason the companies gave for their high rate of profitability was having a presence in the region and that the market was growing, said Harley Seyedin, the chamber's president.
More than 70 per cent of the 461 companies surveyed reported that their primary business focus was serving customers on the mainland, with a nearly even split between companies providing tangible goods and those providing services.
The chamber estimated that total investments by US businesses in southern China would amount to 11.7 billion yuan (HK$14.4 billion) between 2012 and 2014, a net increase of 20 per cent on last year's estimates.
Despite the planned increase in investment and their high degree of profitability, a growing number of US companies in southern China downgraded their opinion of the business environment from 'good' to 'needs improvement'.
Almost a quarter of participants felt that the businesses environment had deteriorated or not improved since a year earlier.
For the seventh consecutive year, regulatory issues were identified by the companies as the single largest business challenge.
Asked to rank a set of macro-level concerns in order of likely negative effects on their business operations, most participants identified inflation as their chief worry.
Seyedin said he was hesitant to identify any long-term trend from the findings. Rather, he suggested, an increasing number of younger owners of small- to medium-sized businesses might have contributed to the more negative outlook observed this year, with their experiences of navigating the regulatory environment to obtain licences and opening their business colouring responses.
The year of arrival, in Guangzhou, of the first post-revolution American trade delegation to China