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Chinese companies in US persevere in tough environment

By YIFAN XU in Washington | | Updated: 2023-05-03 10:32
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Panelists share their views at the launch event for the 2023 Annual Business Survey by the China General Chamber of Commerce - USA on Monday in Washington. [YIFAN XU/CHINA DAILY]

The financial performance of Chinese companies operating in the US is slightly down, with a dour outlook in years ahead, according to an annual survey by a nonprofit organization, but they are still eager to do business here.

"Chinese companies in the US performed slightly worse than the previous year, with cautious expectations for subsequent developments," according to report released Monday by the China General Chamber of Commerce(CGCC)-USA.

Another finding in the report, based on the 2023 annual business survey conducted in February and March by CGCC, is that tensions in US-China relations and persistent inflation are top concerns for Chinese companies in the US.

"Chinese companies operating in the US continued to face an exceptionally complex environment," the report said.

"While challenges do exist, the cumulative synergy and the benefits of the partnership between the US and China far outweigh any risks," Hu Wei, chairman of the CGCC and president of the Bank of China's US branches, wrote in the report.

Abby Li, the director of corporate communications and research at CGCC and one of the report's authors, introduced the report's data, findings, and suggestions.

Twenty-four percent of Chinese companies surveyed experienced a revenue decline of more than one-fifth; 19 percent expected their revenues in the US to decline over the next two years, compared with 14 percent in last year's survey.

Eighty-one percent of respondents were concerned with the bilateral tensions between the US and China, and 68 percent expressed concern over inflation and the US and its economic impact. More than 80 percent of Chinese companies were satisfied (or neutral) with all aspects of the US business environment. Fluctuating business cycles in the past helped Chinese companies cope with short-term fluctuations.

Based on survey result analysis and interviews with senior management, the report made five recommendations for Chinese companies operating in the US: Do not let a crisis go to waste; build a systematic approach to increase the success rate of portfolio expansion; leverage the US market's propensity for innovation; embrace new digital tools; treat North America as a single market; and consider "regional expansion" to Canada and Mexico.

In an interview after the report launch, Li told China Daily that the impact of US-China relations on both Chinese enterprises in the US and US enterprises in China is significant and palpable, affecting their operations and strategies.

"In the current environment, Chinese enterprises in the US place great importance on adhering to US compliance standards, as this is crucial for international market operations," said Liu. "For example, they invite third-party professional institutions and law firms to adapt to local US standards, terms and laws to ensure the lawful and healthy operation of their enterprises.

"Additionally, the Chinese companies contribute to social services and shoulder social responsibility, which are also crucial for them."

Pin Ni, CGCC vice-chair and the president of Wanxiang USA, told China Daily that the report reflects CGCC members' common voice: The enterprises all want to continue to invest more in the US and play a bridge role between the US and China; on the other hand, the pressure of the circumstances is relatively high.

"The recession of the US has just arrived, and it is a real challenge. The deterioration of US-China relations has a greater impact on everyone," he said.

"As long as the flow of people, logistics and capital constantly flows, then the business opportunity will come out. This opportunity will bring value and benefit to both China and the United States," said Ni. "We have to do a lot of work in promoting US-China exchanges. Don't let the current difficulties stop our work. Don't give up. We are at the forefront, and if we give up, there will be a vacuum in US-China exchanges. Once such a vacuum appears, there will surely be other forces and voices to fill it, which is not good for everyone."

There were several panels after the report launch, with participants including Chinese and US officials, leaders of CGCC, and Chinese and US business executives.

They mentioned the difficulties and turbulence encountered by Chinese companies in the US in recent years and perhaps years ahead. Still, they expressed a positive attitude toward the future of the economic and trade relationship and its role in the big picture of bilateral relations.

Xueyuan Xu, the chargé d'affaires at the Chinese embassy in Washington, described the US as an "investment hot spot" and said that the high volume of two-way trade reveals the sober mindset of the business community and the strong market forces.

"It also tells us one thing — winning cooperation has the support from the people. As an important force for Chinese modernization, Chinese businesses are of great significance to closer US-China trade ties and global economic recovery," she said.

Diane Farrell, the deputy undersecretary for international trade of the US Department of Commerce, said that the bilateral economic ties and investments have deepened business relationships between the US and China, offering opportunities to benefit both of their countries.

"Chinese companies, by our count, have invested over $53 billion in US facilities, supporting over 119,000 direct jobs in the United States," said Farrell.

"We still see a very strong future in the US. So, you know, we still have a very strong market share for transit buses," Ben Jurjevich, the business development manager of BYD, a major Chinese conglomerate, said to China Daily. "We have some new products we're very excited about in the US, including our electric school bus. And so, business is good."

The professional "helpers" providing services to favor Chinese companies entering and operating in the US are also confident.

"As part of the US-China business community, it's our job to try and weave together the different strands of the different communities to try and sort of bridge them together," Lanier Saperstein, the banking partner and co-chair of the US-China Practice Group at Dorsey & Whitney LLP, told China Daily.

"We don't necessarily need to agree on everything. China and the US have very different systems. That's OK. They don't need to have our system, and the US doesn't need to adopt China's system," he said. "But I do think there are opportunities to do business and to cooperate and have a much better understanding of one another."

Saperstein said the business community could help smooth the bilateral relationship.

Phillip Berkowitz, who is working as US practice group leader of Littler Mendelson, an employment and labor law firm, said that this is a challenging time for Chinese companies in the US.

"But I would say that overall, according to my work experiences, Chinese businesses are working very hard to build their businesses here and to comply with the law," he told China Daily. "They understand the importance of compliance. They very much want to get things right in the United States.

"They're under real scrutiny from regulators and the press. And I think they're doing an incredible job with their compliance testing and with their commitment to the rule of law here in the US," he said.

"The Chinese and Chinese companies and people are extremely friendly and, in many ways, very similar to Americans. The American and Chinese business cultures are very similar. We are direct with each other," Berkowitz said.

"We like to get things done. These are all positive things for the relationships between our countries, and I think that Chinese businesses can help play a very positive and affirmative role in that process."

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