US firms in China look to services, survey shows

US companies in China are shifting their focus to the service sector in line with China's transition from being the world's factory floor to a knowledge-driven economy, a survey has found.

For the first time, services accounted for more than half, or 52 percent, of US companies' revenue in China in 2013, up 11 percentage points from the previous year.

This is according to the annual China Business Report released on Tuesday by the American Chamber of Commerce in Shanghai.

The survey, which tracks performance and confidence of the largest US business community in China, shows that companies are continuing to move beyond purely manufacturing for exports as costs surge and markets mature.

The growing importance of services contrasts sharply with manufacturing, which dropped by 10 percent to comprise 37 percent of companies' revenues in 2013, the survey shows.

"It is important to keep in mind that China's leadership has prioritized the development of the country's service sectors, and American businesses are world leaders in these areas," said Kenneth Jarrett, president of AmCham Shanghai.

Tim Huang, chief operating officer of Bank of America Merrill Lynch in Shanghai, said, "I've seen a growing number of our clients in the service sector in the past five years and I expect this trend to continue."

The study interviewed 399 member companies that run operations in first-tier cities including Shanghai and Beijing, the Yangtze River Delta region, as well as central and western powerhouses of China. Fifty-four percent of them have been in the country for more than 10 years.

The service sector accounted for 46.1 percent of China's gross domestic product in 2013, outpacing manufacturing for the first time in the country's economic output, according to the National Bureau of Statistics. Shanghai has the largest proportion of the service sector, with more than 62.6 percent.

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