American companies doing business in China are more pessimistic about the next five years than ever before, in the face of rising geopolitical uncertainties, fierce competition and a chronic economic slowdown, according to findings by a prominent business chamber.
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Only 41 per cent of surveyed American firms expressed optimism about their five-year business outlook in China, or almost half the rate in 2021, according to a report released by the American Chamber of Commerce (AmCham) in Shanghai on Wednesday.
That marks a record low for the fourth consecutive year, the chamber said, adding that an all-time high of 37 per cent of respondents, up from 28 per cent last year, had a pessimistic or slightly pessimistic outlook, the chamber said.
Despite tremendous variation across sectors, the uncertain US-China relationship is the leading driver, while cutthroat competition, as well as the economy’s slowdown, have together driven down the confidence level, said Eric Zheng, president of AmCham Shanghai, on Tuesday.
“The competition is getting very fierce; it’s hard to succeed,” Zheng said, noting how the situation has changed from how it was 10 to 20 years ago. “When multinational companies came here, it was very easy to execute your strategy. Basically, you just replicated your strategies in the US or other countries, and you could do well in China.”
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That is no longer the case, he said, as their Chinese counterparts are becoming increasingly innovative and competitive.
The waning US sentiment is part of a broader pullback by global investors. In the first seven months of this year, China’s actual use of foreign direct investment fell 13.4 per cent, year on year, to 467.34 billion yuan (US$67.6 billion).