PwC China in partnership with AmCham Shanghai released the 2020 China Business Report which shows that despite a rise in Sino-US tensions and a slowing economy in 2019, American businesses in China remained profitable. However, the global COVID-19 pandemic outbreak in early 2020 has impacted investment plans as well as revenue expectations for the rest of the year. Sentiment varies across sectors and industries, influenced by perceptions of market opportunity, competitive landscape, regulatory dynamics, and pessimism about the geopolitical landscape and its implications for trade and demand.
While there has been considerable talk about US companies moving production or supply chains out of China in response to geopolitical concerns, tariffs or supply chain weaknesses exposed by COVID-19, very few companies are moving much production.
The effect of Sino-US tensions on business in China has, however, spilled into human capital. Besides, more respondents this year believed that the Chinese government treats foreign and local companies equally. Over half of manufacturers say foreign and local companies are treated equally. But nearly two thirds of those in the services sector describe policy as biased towards local companies. Industries where favouritism toward local companies is considered most acute include banking, finance and insurance, healthcare and hospital services, and pharmaceuticals, medical devices and life sciences. At the regulatory level, companies saw improvements in several areas, though concerns remain surrounding intellectual property protection.