US firms upbeat on China
By Jiang Wei (China Daily)
Updated: 2005-09-02 08:55

A huge majority of US businesses operating in China reported increases in annual revenues last year, according to the results of a survey released yesterday by two American chambers of commerce.

About 86 per cent of respondents said they posted higher revenues in 2004 compared to the previous year; and 68 per cent were "profitable" or "very profitable" last year, according to the "White Paper 2005 American Business in China."

The white paper, the seventh annual report of its kind, was published by the American Chamber of Commerce in China (AmCham) and the American Chamber of Commerce in Shanghai; and covered a wide range of sectors, from manufacturing, trade and distribution to services. It was based on a survey of nearly 2,000 members of the two chambers.

The nationwide survey also showed that US companies had great confidence in China's business environment.

"The vast majority of survey respondents 93 per cent report that China's economic reforms have improved the climate for US businesses and 92 per cent said their five-year business outlook in China is 'optimistic' or 'cautiously optimistic'," the white paper said.

At the same time, US businesses are facing increasing competition from both local companies and foreign rivals.

Profitability in 2004 was slightly lower that in the previous two years, indicating more challenges.

"We attribute the levelling margin to both improved markets elsewhere and to US firms' financial performance in China more closely tracking their global performance as China revenues grow," the white paper said.

It explained that factors such as price pressure from major customers as well as changes in market and commodity prices, and salaries, are driving down margins. But the white paper added this was minor compared to the continuity of higher profitability since China joined the World Trade Organization.

Despite increasing challenges, most US companies said they would increase business activities in China.

According to the white paper, IPRs (intellectual property rights) remain the top concern of US companies in China, in particular, enforcement by local governments.

Emory Williams, chairman of AmCham China, said the annual white paper made suggestions not only to the Chinese Government but also to the US administration.

For example, he said, the US Government should relax restrictions on issuing visas to Chinese.

According to the chamber's survey, visas issued to Chinese nationals were up 23 per cent compared to the previous year, but still lower that the level before September 11, 2001.

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