SHANGHAI, Jan. 21, 2016 /PRNewswire/ -- U.S. companies are still successful in China, but revenue growth and investment levels, especially in manufacturing, are slowing. Retail and service sector companies are among the most optimistic about the future, according to the AmCham Shanghai's 2015-2016 China Business Report released at the Peace Hotel in Shanghai.
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. Seventy-six percent expect revenue growth in 2016, but mostly below 10 percent. Eighty one 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; ecommerce; 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.
"2015 was a challenging year for businesses in China. American companies need to adjust to this new setting but also to the opportunities that remain, such as in service sector growth," said Ken Jarrett, President of AmCham Shanghai. "We must embrace innovation and new business models, while urging the government to undertake needed reforms."
"This is a new environment. Our member companies are making adjustments, which demonstrates a commitment to the market and good understanding of the drivers in this new economy," said Ker Gibbs, Chairman of AmCham Shanghai. "China's demand for healthcare and the growth of e-commerce will create opportunities for future growth, but reforms are clearly needed here."
Competition from China's private companies is viewed as the number one disrupter to U.S. companies over the next five years. U.S. companies continue to report that local and foreign businesses are not treated equally by government bodies.
"We can see that regulatory reform remains an ongoing issue for American companies, and while there are positive signs, such as an increase in the proportion of respondents who consider regulations for their industry to be transparent, this is still coming from a relatively low base. Overall, the survey results tell the story of China's transformation from an industrial export-based economy, to an increasingly service-oriented one, a trend we expect will act as a beacon, attracting more American firms into the market," said Ron Klein, Principal, PwC Strategy&.
About the American Chamber of Commerce in Shanghai
The American Chamber of Commerce in Shanghai (AmCham Shanghai), known as the "Voice of American Business" in China, is one of the largest and fastest growing American Chambers in the Asia Pacific region. Founded in 1915, AmCham Shanghai was the third American Chamber established outside the United States. As a non-profit, non-partisan business organization, AmCham Shanghai is committed to the principles of free trade, open markets, private enterprise and the unrestricted flow of information.
AmCham Shanghai's mission is to enable the success of our members and strengthen U.S.-China commercial ties through our role as a not-for-profit service provider of high quality business resources and support, policy advocacy, and relationship-building opportunities.
Visit www.amcham-shanghai.org for more information about us.
About PwC
PwC China, Hong Kong and Macau work together on a collaborative basis subject to local applicable laws. Collectively, we have around 540 partners and 12,800 people in total. We provide organizations with the professional service they need, wherever they may be located. Our highly qualified, experienced professionals listen to different points of view to help organizations solve their business issues and identify and maximize the opportunities they seek. Our industry specialization allows us to help co-create solutions with our clients for their sector of interest.
PwC - Globally
At PwC, our purpose is to build trust in society and solve important problems. We're a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
