A new report from the American Chamber of Commerce in Shanghai (AmCham Shanghai) reveals a concerning outlook among American enterprises in China. Only 47% of surveyed American businesses expressed optimism about their business prospects in China for the next five years, marking a new low since surveys began in 1999. Last year, just 66% of American companies operating in China were profitable, also hitting a record low.
The AmCham Shanghai released the “2024 China Business Report” on September 12, highlighting that factors such as geopolitical tensions, China’s slowing economic growth, and intense domestic competition have led American businesses in China to be pessimistic about their future operations in the country.
Among the 306 American companies surveyed, only 47% of respondents held optimistic attitudes towards their business prospects in China over the next five years, a 5% decrease compared to the previous survey. Furthermore, only 66% of American enterprises were profitable last year, marking the lowest figures since the report was first published in 1999.
The report noted that last year, 25% of chamber members reduced their investments in China, the highest on record, with expectations for this year to decrease to 20%. The primary reasons cited for the reduction in investments were China’s slowing economic growth. Additionally, 40% of member companies redirected planned investments to other markets such as Southeast Asia and India, a percentage similar to the previous year.
Allan Gabor, the Chairman of AmCham Shanghai, acknowledged that the trend of declining profitability was influenced by various factors. He stated, “Domestic demand, monetary tightening, and of course, we cannot ignore our members’ views and concerns on geopolitics.” Gabor emphasized the importance of reassessing investment and operational plans in China and how to strategize future business operations in the country.
The President of the Chamber, Zheng Yi, emphasized that the current geopolitical uncertainties are more severe than ever before.
The 306 American companies surveyed represent various industries. Data from the US Department of State shows that in 2023, direct US investment in China decreased by 14% from the previous year to $163 billion.