The U.S.-China Business Council (USCBC) released its “2010 Member Priorities Survey Results” for U.S. investors on November 17 after interviewing a cross section of leading American companies. The survey says while most U.S. companies still hold strong commitments to the Chinese market and stayed profitable in China over the past year, the market is in general less FDI friendly compared to three years ago.<\/p>\n
The survey listed the top 10 investor concerns surrounding the Chinese market. Human resource issues, licensing and business approval, as well as competition with state-owned enterprises (SOEs) are considered the top three issues that hinder American investment in China from further growth. Other concerns that are ranked from fourth to tenth are related to China’s intellectual property rights (IPR) enforcement, cost increases, market access in services, transparency, protectionism risks, government procurement, and standards of conformity assessment.<\/p>\n
The report shows that government policy is one of the major factors that lead to these concerns. In research on “the primary restraint on increased profitability in China,” 27 percent of companies consider PRC government policies as the top restraint, and 24 percent of them chose domestic competition as the biggest hindrance. The report gives the example of how China’s Anti-monopoly Law might complicate merger and acquisition procedures, which have become one of the major avenues most U.S. companies take for further expansion. It also mentions many of the current policies that favor Chinese companies for government procurement and indigenous innovation have greatly contributed to the increasingly fierce competition between foreign and Chinese enterprises.<\/p>\n
Other concerns in the list show what improvements U.S. investors hope for in China’s future policy-making. The lack of IPR enforcement remains one of the top 10 issues investors are apprehensive of in the past five years. Of the interviewed companies, 59 percent think the IPR protection status in China remains unchanged in the past one year. Companies in the service sector also complain about the arduous market access in services due to the difficulty in licensing, special treatment to SOEs and a series of other specific barriers. More than that, all respondents say they look forward to a more transparent market system with a clearer interpretation of regulations and complete system of standards and conformity assessment procedures.<\/p>\n
Another noticeable issue for U.S. investors is the availability and cost increase of China’s human resources. Recruiting and retaining talent ranked as one of the top concerns this year. Roughly 8 percent of companies consider “insufficient personnel” as the leading restraint on profit growth. Meanwhile, more than half respondents think they have received pressure from the increasing activities on labor issues due to China’s new labor regulations and mounting labor unions.<\/p>\n
Increases in labor costs are also seen as the reason why business operations are becoming more expensive in China. While 90 percent of investors think China’s rising cost can slow down their business, 58 percent of them blame escalating labor costs as the top contributor to the overall cost augment. Other than the expense on labor force, companies consider the cost of taxes, materials, land and utilities as the four other major causes of the cost increase. Nearly 80 percent of respondents believe the ascending cost will impact on their future commitment to Chinese market.<\/p>\n
This article was written for China business<\/a> site, China-Briefing.com. The site is contributed to by Chris Devonshire-Ellis<\/a>. Vietnam Briefing and Asia Briefing were also founded by Chris Devonshire-Ellis<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" The U.S.-China Business Council (USCBC) released its “2010 Member Priorities Survey Results” for U.S. investors on November 17 after interviewing a cross section of leading American companies. The survey says while most U.S. companies still hold strong commitments to the Chinese market and stayed profitable in China over the past year, the market is in … <\/p>\n