Growth Continues Amidst Economic Slowdown, Rising Competition, Policy Uncertainty
Earlier today, USCBC President John Frisbie hosted a press call to discuss the reports in light of the upcoming visit pf Chinese President Xi Jinping.
The Member Survey specifically addresses how despite market growth, company optimism is tempered by rising costs, domestic competition, and continuing regulatory and market access barriers. Growth in China is slowing for American companies, but 41 percent still report double-digit revenue growth in the last year. While two-thirds project revenue growth in 2015, 20 percent expect a revenue decline, up from 11 percent in last year’s survey. The number of companies reporting that their China operations are profitable remains high and unchanged from our previous surveys—85 percent. However, cost increases and rising competition continue to squeeze margins.
Through the Economic Reform Scorecard, the USCBC tracks developments on tangible progress the Chinese central government agencies have made toward implementing economic reform and the impact these reforms may have on US companies. Overall, China’s economic reform efforts have yet to address the core concerns of foreign business, in effect holding China back from achieving its own goals to transform its economy to a more consumption- and services-based model. Looking forward, the next inflection point is a crucial one: President Xi Jinping will make his first official state visit to the United States in September. This will present a major opportunity for China’s leadership to address the slow pace of reform actions.
The top 10 challenges cited by USCBC member companies are:
1. Competition with Chinese companies in China
3. Cost increases
4. IPR enforcement
7. Human resources: Talent recruitment and retention
8. Data flows
9. Uneven enforcement/implementation of Chinese laws
10. Overcapacity in the China market