AmCham Shanghai Launches 2008 China Business Report

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SHANGHAI, Dec. 17 – The American Chamber of Commerce in Shanghai launched their 2008 China Business Report today, based on an online survey answered by 238 U.S.-based companies doing business in the country.

The survey, conducted prior to the eruption of the global credit crisis in September and October of this year prior, provides a comprehensive look at the conditions that affect American business interests in China. It tackles issues pertaining to business performance, strategy, objectives and challenges. The consensus remains among U.S. businesses already in the country that China is still a vital market for their overall global strategy.

During the report’s launch at the Portman Ritz-Carltonl, AmCham panelists said that U.S. businesses are bullish on China in the long-term but not in the short-term as some may delay expansion plans in anticipation of dropping prices.

Charles Mo, AmCham vice-chairman, said that U.S. companies already in the country might actually speed up investment. In the survey, 80 percent of those polled said they would increase investment in China for 2009.

Companies are still looking at mostly second- and third-tier cities for investment because of transportation and logistics concerns. Those expanding to other cities outside the main economic hubs for Eastern China cite increasing market shares as their main motivation.

The majority of those polled were businesses that have been in the country for at least 10 years and compete in mature markets. AmCham Chairman J. Norwell Coquillard said that requests for transfer pricing audits and custom tax audits are becoming common among American companies. “China continues to be a growth market for many U.S. companies.”

According to the report, the number one operational challenge faced by U.S. businesses in the country remains to be the hiring and retention of top talent followed by inconsistent regulatory implementation and bureaucracy. This has been the major concern amongst AmCham’s U.S. members since 1999 when the first China Business Survey was conducted.

When asked about forecasts for next year, 75 percent of respondents said they expected global economic conditions to negatively impact their operations. More than 80 percent of respondents remain optimistic about the business prospects of China in the next five years.

A 70 percent of respondents said that they ran profitable operations in 2008 while 77 percent said they improved performance based on 2007 figures.