Foreign companies show faith in Chinese economy, survey says

Most foreign companies operating in China that took part in a new study said they were optimistic about the growth in the Chinese market, according to the American Chamber of Commerce in South China (AmCham South China), who commissioned the research.

Of those companies surveyed, 76% said they planned to reinvest in China in 2024. Of these, 45% said that their primary area of investment focuses on sales, marketing and business development. Other key areas include research and development, automation and productivity development.

The annual report on the state of business in South China – called the 2024 Special Report on the State of Business in South China – is regarded as a reliable indicator of China’s overall business environment. This year marks the 20th release of the report by the organisation.

The companies studied for the report originate in the United States and the European Union, as well as other countries and regions, of which wholly foreign-owned enterprises account for more than half. U.S. companies represent nearly half of the businesses who took part in the research.

Eighty-six percent of the companies studied say that they would not withdraw from the Chinese market due to the trade tensions between China and the United States. Two-thirds (66%) of U.S. companies claim that they will remain committed to the Chinese market, representing the highest proportion of all businesses studied.

“Potential growth of the Chinese market is the primary driver for increasing investments in China or shifting investments from other markets to China, followed by industrial cluster effect and preferential policies,” said Harley Seyedin, president of AmCham South China.

Some 57% of foreign companies that took part in the research say China is in their top three investment locations, an increase of 5% from 2022’s survey. Guangzhou, the capital city of Guangdong province and known as South China’s manufacturing hub, has maintained its status as the top investment destination in the country for seven consecutive years, followed by Shenzhen, Shanghai and Beijing.

The proportion of companies that consider the overall business environment in South China as ‘excellent’ or ‘good’ grew by one percentage point to 75%.

AmCham South China is a non-partisan, non-government, non-profit business organisation, accredited in 1995 by the U.S. Chamber of Commerce.

According to its website, AmCham South China represents more than 2,300 American and international companies doing business in China.

Its mission is “to promote the development of trade, commerce and investment between the United States and the People’s Republic of China with a special focus on South China; to provide a forum in which member businesses can identify their common interests and discuss solutions for common problems; to work with and advocate member interests with relevant organisations in South China, elsewhere in China and the United States, and to set the standards for corporate social responsibility for the community that the Chamber serves.”

Its objectives are:

• To promote the development of trade, commerce, and investment between the United States and the People’s Republic of China.
• To provide a forum in which American businesses in China can identify and discuss common interests regarding their commercial interests in China.
• To work with organizations in China on matters of mutual interest.
• To maintain relations with the U.S. Chamber of Commerce and other Chambers of Commerce or commercial organisations elsewhere.

 

Government continues to back overseas investors

Meanwhile, China will continue to provide better service for foreign investors, according to Chinese Vice Premier He Lifeng.

He made the comments at a recent meeting with Sukanto Tanoto, chairman of Singapore’s Royal Golden Eagle (RGE) Group, as the two sides exchanged views on China’s economic development, deepening reform and opening up, and the development of foreign businesses in China.

The Vice President said China’s economic recovery is accelerating, creating more opportunities for foreign enterprises in China. “We will continue to build a market-oriented, law-based and world-class business environment, and provide better services for foreign investors,” he said.

Tanoto said that he is optimistic about the Chinese market and development prospects, and will continue to expand investment in the country.