U.S. companies are still successful in China, but revenue growth and investment levels are slowing, especially in manufacturing. Retail and service operators meanwhile, are among the most optimistic about future prospects. These findings come from the 2015-2016 China Business Report, produced by American Chamber of Commerce Shanghai, working with survey partner, PwC China, which was released in Shanghai in January 2016.
The report found most U.S. companies remain profitable (71 percent), but only 61 percent reported revenue growth for 2015, a significant decrease from the 2014 level of 75 percent. Moreover, the number of companies with declining revenues more than doubled to 23 percent from 11 percent last year. Altogether, 76 percent expect revenue growth in 2016, but mostly below 10 percent, while 81 percent of companies plan to increase their investment in 2016, yet at lower levels than before.
Retail remains the most bullish sector, with 91 percent of companies proposing investment increases for 2016, followed by 85 percent of service sector companies. Investment choices increasingly reflect the transition to a more developed economy, with priority being placed on sales, marketing and business development; research and development; e-commerce; and productivity and automation.
Costs, domestic competition and the economic slowdown are seen as key risks for 2016. New issues such as Internet quality, data security and protection of commercial secrets were also identified as significant challenges.
The report is based on the results of AmCham Shanghai’s 2015 China Business Climate Survey, one of the longest running surveys of U.S. business in China. This year, 406 companies responded to the survey, which included questions about company performance, challenges and strategy, the future outlook for risk, business disruption and trends driving business.