A majority of United States companies operating in China are optimistic about profits and are investing more to anchor onto China's anticipated future growth, according to a new survey.
Of companies surveyed by the American Chamber of Commerce in Shanghai and consultancy PwC, 82.2 percent said they projected revenue growth in 2021, a return to the levels of confidence last seen before the height of US-China trade tensions.
Of the 338 companies participating in the annual survey, which is in its 23rd year, nearly 80 percent described themselves as either "optimistic" or "slightly optimistic" about the five-year business outlook in China, a return to the figures found between 2015 and 2018.
"The sheer size, consumer base and opportunities present in this market are gravitating companies into China," said Jeff Yuan, a lead partner for China-US Multinational Corporation Business Services Group at PwC China.
China remained a stable source of profitability, with 77.1 percent of survey respondents reporting positive earnings last year. Nearly 70 percent expected revenue growth in China to outpace their companies' worldwide growth for the next three to five years.
Speculations that some US companies might move production or supply chains out of China in the aftermath of the COVID-19 pandemic have proved unfounded: Of the 125 respondents that said they manufacture in China, 72 percent had no plans to move any production out of China in the next three years.
"American businesses in China bounced back quickly from the 2020 COVID-19-induced shutdown," said Jeffrey Lehman, chairman of AmCham Shanghai. The fact that many Chinese companies have localized supply chains is tamping down the negative impacts of bilateral tariff disputes and the COVID-19 pandemic, he added.
Global life sciences company Cytiva is investing $200 million in the Asia-Pacific region. This includes a tripling of the capacity for bioprocessing of single-use consumables in China, which is the company's Asia-Pacific headquarters and its second-largest single-country market after the US.
"Our continuous investment will serve as a powerful engine to boost Cytiva to provide Chinese customers with more diverse technical support, help China realize 'smart manufacturing', and contribute to China's local R&D and capacity-building," Yu Lihua, general manager of Cytiva China, told China Daily earlier this month.
Yuan, of PwC, said, "Having a China strategy is still a priority for many of the US companies in China that are optimistic about the future in China."
Lehman, the AmCham Shanghai chairman, said US companies, notably those in the agriculture, finance and chemical sectors, are finding that the intellectual property and regulatory environment is "significantly improving".
Other highlights of the survey findings include a priority on investing in digital technology-related areas and a doubling down on projects with an emphasis on environmental, social and corporate governance factors.