Despite widespread plans to boost investment, 89 percent of US companies believe China is losing its competitive advantage due to rising costs, up 11 percentage points from last year, according the 2012 Business Climate Survey conducted by the American Chamber of Commerce in the People’s Republic of China (AmCham China).
The survey of 390 AmCham members from across China appeared to show profound ambivalence toward the Chinese market, but the responses may reflect a growing number of companies feel compelled to invest in the country to serve its emerging domestic market even as they shift outsourcing to cheaper countries.
More than 80 percent of AmCham China members plan to increase their investment in China this year and a steadily-growing majority of survey respondents 66 percent in 2012 say their goal is to produce goods or services for China, up from 58 percent just two years ago. Moreover, a significant number (39 percent) said their profit margins in China were higher than in other geographies around the world. Just over three quarters of those surveyed expect their China revenues in 2012 to be higher than last year.
Despite such plans, just over three quarters of respondents said the cost of social benefits would hurt their China operations, compared to 53 percent a year ago. The percentage of respondents who rated China’s IPR enforcement as effective was 79 percent, down nine points from last year.
