U.S. companies doing business in China ranked the availability of labor and growing protectionism as their top two concerns, according to the latest member survey from the US China Business Council (USCBC).
Businesses are watching two emerging issues: collective bargaining and government-set wage increases, reads the report. Though 82% of respondents indicated their companies had not yet been approached to engage in collective bargaining for their workers, the PRC central government has clarified that collective bargaining is a key component of its plan to redistribute income and boost domestic consumption and some provinces and cities, including Shanghai and Shenzhen, have released specific regulations designed to promote collective bargaining.
At the same time the central government is considering a plan that would set guidelines for future wage increases. This comes directly on the heels of provincial governments announcing double-digit increases to local minimum wages this spring and summer.
U.S. companies continue to display impressive financial results from their China business. Even in a down year globally, 87% of respondents stated their China operations posted revenue growth in 2009, and close to 90% said profit margin rates in China equaled or exceeded their company's global margins.
“However, even with this commercial success, US companies are showing signs of caution due to growing trends of protectionism and policies that could curtail market access and fair competition,” concluded Frisbie.
Top 10 concerns cited by USCBC member companies:
- Human resources: talent recruitment and retention (tie)
- Administrative licensing, business, and product approvals (tie)
- Competition with state-owned enterprises (tie)
- Intellectual property rights enforcement
- Cost increases
- Market access in services
- Transparency
- Protectionism risks in China
- Government procurement
- Standards and conformity assessment
