AmCham report positive on China market

GUANGZHOU -- Foreign companies are largely positive about their prospects in China despite recent pessimism over the Chinese government's regulation of them, an annual survey has suggested.

The American Chamber of Commerce in South China released its report on China's business environment on Monday, showing that 85 percent of those polled rate the situation in south China as "good", "very good", or "outstanding".

According to the report, the average reinvestment budgets of the 275 respondents will be lowered by 9.3 percent in 2015 from 2014's historic high of $250 million. And reinvestment budgets over the coming three years will be down by 16.9 percent.

However, AmCham South China member companies, which collectively account for nearly 40 percent of all US-China business, trade and investment, plan to reinvest profits of more than $12 billion this year.

Some 83.5 percent of participants reported having hired additional staff.

Meanwhile, 94.4 percent said they were already profitable or would be within the next two years. This is among the strongest majorities in the study's seven-year history.

Harley Seyedin, president of the chamber, said that "executives on the ground in China have a high level of confidence in the future of the market and are investing amounts within their decision-making ability."

Where companies were doubtful about the prospects, the trigger was worry about regulation. Despite strong denials by Chinese officials, some foreign companies continue to express concern about being treated unfairly.

"Over 30 transnational companies were investigated by the Chinese government in 2014, and some foreign investors might think they are not welcom in China," Seyedin said. "But the fact is that 335 companies were investigated and only 33 of them were from outside China. Few Chinese companies being probed told the public about it and therefore people might think only foreign companies were targeted."

He called for a "more transparent environment" to ease foreign companies' concerns.

Aside from regulation, challenges the responding companies expected to face in 2015 include "local competition", "rising labor costs", "lack of qualified managerial and specialist talent" and "foreign competition".

Seyedin denied the rumor that foreign businesses are withdrawing from the country. "They're profitable and they're doing very well," he said. "Some 79.3 percent of the participants reported that their primary business focus was providing value-added goods and services for the Chinese market. Our companies led the entire industry in moving up the value chain."

Vitasoy, a Hong Kong-based beverage company, is an example of those expanding. The company's fourth factory in the Chinese mainland is under construction in the central city of Wuhan, with an initial investment of around $79.5 million.

"Both our revenue and profit have seen continuous increase in recent years. In 2014, we achieved a growth of more than 30 percent, which is quite extraordinary in the beverage industry," Richard Ren, Vitasoy China's vice president of corporate affairs, told Xinhua.

"The Chinese mainland is now our largest market and it accounts for about 42 percent of our revenue. We're very confident in the future of the economy, and we'll actively face the challenges such as rising costs," Ren said.