AmCham report: US firms upbeat on China business prospects

American companies remain generally optimistic about business prospects in China, according to the latest 2023 China Business Report by AmCham Shanghai.

It revealed that the end of the pandemic has brought stability to revenue expectations, with an increasing number of companies planning to ramp up their investments in China this year compared with 2022.

The report, based on the results of AmCham Shanghai's 2023 China Business Survey, indicated that 52 percent of companies expect greater revenue in 2023 than in the previous year, among which retail firms are the most optimistic, with 74 percent anticipating higher revenues. This positive outlook emphasizes the resilience and potential of China's market.

Despite the challenges posed by Sino-US bilateral tensions, COVID disruptions and macroeconomic pressures, 68 percent of respondents reported profits in 2022, showing the ability of American firms to navigate the complex environment.

Furthermore, over the next three to five years, 40 percent of respondents expect revenue growth in China to outpace their companies' worldwide growth.

While the percentage of companies optimistic about the five-year business outlook decreased slightly to 52 percent, the findings highlight the ongoing attractiveness of China as a business destination.

In fact, 31 percent of companies surveyed are increasing their investment in China this year, a 6 percentage point increase compared to 2022, with China's market growth potential remaining the primary reason for companies to invest or expand their operations in the country.

To address the concerns, the Chinese government recently extended preferential individual income tax policies on foreign expatriates' benefits-in-kind and released the State Council's 24 measures to ensure national treatment of foreign-invested enterprises.

"Recent developments are more encouraging," said Sean Stein, chairman of AmCham Shanghai. "After several high-level visits, the United States and China have taken steps to stabilize the bilateral relationship and a series of reforms announced in August signal the Chinese government's desire to improve the investment climate. If implemented, those reforms could reduce uncertainty and help restore investor confidence."

Eric Zheng, president of AmCham Shanghai, emphasized the long-term commitment of American companies to the Chinese market. "Despite the challenges, our member companies remain convinced that China is an important market and that they should pursue mutually beneficial commercial opportunities in this country while mitigating potential risks."

The 2023 China Business Report, conducted with analytical support from PwC China, is one of the longest-running surveys of US business in China.

This year, 325 AmCham Shanghai members responded to the survey, sharing insights on company performance, economic outlook, investment, operational challenges, data policies, regulatory treatment, decoupling, geopolitical tensions, and supply chain shifts.