Overseas firms in South China see less profit in '09

By Li Wenfang (chinadaily.com.cn)
Updated: 2009-03-03 14:39

GUANGZHOU: About 76 percent of 551 overseas companies in South China said in a survey they were profitable last year but were beginning to see a slight slowdown in profitability.

The companies, half of which are from the United States, are members of and polled by the American Chamber of Commerce in South China. The majority of them are located in Guangzhou and Shenzhen in Guangdong province.

Profitability was still very high and about 92 percent of the companies expected profitability in the coming two years, chamber president Harley Seyedin told China Daily.

However, he said, "We are beginning to see a slight slowdown in profitability."

Compared with the survey done for 2007, 20 percent-plus more companies did not meet their profitability expectations and fewer exceeded profitability expectations.

The new comers, which had settled in South China for less than five years and accounted for 24 percent of the companies polled, expected to become profitable in two years, while in the past surveys it had been usually one year.

The majority of the companies are still expanding but at a lower rate, Seyedin said.

The total reinvestment budgeted for this year and the next three years is significantly lower, by 40 percent, although it is still substantial, in billions of dollars.

Projects in value of $50 million and more are still in place, with long-term strategic objectives.

The slowdown in reinvestment is attributed to less money available amid the global financial crisis, the increasingly heated competition among Asian countries for foreign capital, rising cost in China and decreasing special benefits to foreign companies in China, he said.

The companies in the survey did not reduce their staff but hired less.

The No 1 concern of the companies in the survey, as before, was regulatory issues and changes.

The companies called for more time between when the changes are announced and when they are implemented to allow them to plan and adjust.