In the face of global economic changes and a deteriorating political climate, American companies in China are facing record low profit margins and business confidence. This trend raises important questions about the future of business in China and raises concerns among investors.
A recent report published by an American business association has revealed alarming trends for American companies operating in China. According to a report published by Yahoo Finance, in 2023, only 66% of the 306 companies surveyed were able to report making a profit - this is the lowest figure in the history of research.
In addition, less than half of the respondents, only 47%, expressed optimism about their business in China for the next five years. This is another low point in surveys conducted for more than twenty years.
The reasons for these negative trends were the deteriorating relations between Beijing and Washington, as well as the slowdown in the Chinese economy, which is manifested in a decrease in consumer demand and deflation. Conflicts over trade, production and territorial disputes, especially in the South China Sea, only exacerbate the situation.
Eric Zheng, President of the American Chamber of Commerce in Shanghai, noted that the increased risks of doing business in China contradict the slowing market and declining demand. "This is a balance between risk and reward," he stressed, adding that companies are beginning to redistribute their investments to other countries such as Vietnam, Malaysia and the regions of South Asia.
The report showed that 25% of respondents have reduced their investments in China in 2023, as concerns about economic growth become more urgent. Despite the fact that slightly more than half of American companies expect revenue to increase compared to the previous year, only 37% expect that growth in China will exceed global figures in the next three to five years.
This study became relevant against the background of a similar report by the European Chamber of Commerce in China expressing concern about the growing risks of doing business in the country. This document emphasizes that many European companies are beginning to consider the risks of investing in China above the possible benefits.
"We are at a tipping point and we call on the Chinese government to act to change the situation," said Jens Eskelund, president of the European Chamber, at a press conference. The business communities of both countries urged China to focus on economic growth and reforms, as well as ensure a level playing field for all companies.
