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5 Special Report on the State of Business in South China
President’s Report
THIS YEAR, 275 companies participated in our Special treated equally from a regulatory standpoint, and if they felt
Report on the State of Business in South China. e they had better insight into the government’s decision-mak-
study, which began in 2006, o ers us unique insight into ing process, I am fully con dent that we would see invest-
the growth and transformation of the Chinese economy. ments grow rapidly across China. Moreover, I would argue
In 2015 the cross-section of participants has continued to that these improvements would essentially be favorable side-
broaden. American-invested Joint Ventures and Wholly- e ects of broader economic reform that would propel China’s
Foreign Owned Enterprises are joined by their counterparts economy into a position of primacy world-wide.
from other nations and by a growing contingent of Mainland
Chinese enterprises. We see companies of all sizes, from those Regardless of uncertainty about local regulatory issues,
with fewer than 50 employees and less than $1 million in we nd strong reinvestment numbers across the board. Most
revenue all the way up to companies exceeding $500 million participants reported investing more than they had originally
in revenue and with thousands of employees worldwide. Every budgeted for over the course of 2014, and although total
sector of the economy is represented, from energy generation investment amounts have seen nearly a 10% decline from
and agriculture all the way to cutting edge software and high- historic highs last year, we estimate that AmCham South
precision machinery. China member companies stand to reinvest pro ts amounting
to more than $12 billion in 2015 and more than $13.8 billion
is year we nd that exactly half of our study participants between 2015 and 2017.
are involved in manufacturing or trading goods and half
involved in providing services to the market. One thing that As has been the case in the past several years, we expect one
unites those two groups, however, is the fact that 79.3 percent key area of investment to be human resources: this year fully
of all participants report providing goods or services to the 83.5 percent of study participants reported having hired new
Chinese market as their primary business focus instead of employees to take advantage of the labor market. We estimate
creating goods or services for export. that this has led to the creation of 534,000 new jobs in China.
Similarly, 85.3 percent of participants responded that they In light of these gures, I believe it is impossible to argue
considered the overall business environment in South China to against the fact that business continues to boom in what is on-
be “Good,” “Very Good” or “Outstanding,” an increase over track to continue to be the world’s fastest growing economy.
last year’s result. 42.3 percent of participants, meanwhile, re-
ported that in their opinion the business environment had im- With best regards,
proved somewhat or greatly in the past 12 months and a further
38.9 percent reported that it had remained about the same. Harley Seyedin
President
In terms of planning and risk management, the biggest
perceived challenge to the operations of study participants e American Chamber of Commerce in South China
over the coming year is once again “Regulatory issues (Chinese Vice Chairman, China A airs
government).” Trailing behind in second, third, fourth and
e Asia Paci c Council of American Chambers of Commerce
fth places are “Local competition,” “Rising labor costs,”
“Foreign competition” and “Lack of quali able managerial
or specialist talent.” Results for the 3-year period are quite
similar, with only the last two concerns trading places.
Elsewhere, participants identi ed “Increasing in ation” as
one of their top policy-oriented concerns.
On the topic of regulatory issues, I rmly believe that
this is the largest impediment to massive investment across
China. From the perspective of foreign investors, the lack of
transparency—or even simply the perception of such a lack—
will continue to limit the number and scale of investments.
If foreign companies felt more con dent that they would be
6
President’s Report
THIS YEAR, 275 companies participated in our Special treated equally from a regulatory standpoint, and if they felt
Report on the State of Business in South China. e they had better insight into the government’s decision-mak-
study, which began in 2006, o ers us unique insight into ing process, I am fully con dent that we would see invest-
the growth and transformation of the Chinese economy. ments grow rapidly across China. Moreover, I would argue
In 2015 the cross-section of participants has continued to that these improvements would essentially be favorable side-
broaden. American-invested Joint Ventures and Wholly- e ects of broader economic reform that would propel China’s
Foreign Owned Enterprises are joined by their counterparts economy into a position of primacy world-wide.
from other nations and by a growing contingent of Mainland
Chinese enterprises. We see companies of all sizes, from those Regardless of uncertainty about local regulatory issues,
with fewer than 50 employees and less than $1 million in we nd strong reinvestment numbers across the board. Most
revenue all the way up to companies exceeding $500 million participants reported investing more than they had originally
in revenue and with thousands of employees worldwide. Every budgeted for over the course of 2014, and although total
sector of the economy is represented, from energy generation investment amounts have seen nearly a 10% decline from
and agriculture all the way to cutting edge software and high- historic highs last year, we estimate that AmCham South
precision machinery. China member companies stand to reinvest pro ts amounting
to more than $12 billion in 2015 and more than $13.8 billion
is year we nd that exactly half of our study participants between 2015 and 2017.
are involved in manufacturing or trading goods and half
involved in providing services to the market. One thing that As has been the case in the past several years, we expect one
unites those two groups, however, is the fact that 79.3 percent key area of investment to be human resources: this year fully
of all participants report providing goods or services to the 83.5 percent of study participants reported having hired new
Chinese market as their primary business focus instead of employees to take advantage of the labor market. We estimate
creating goods or services for export. that this has led to the creation of 534,000 new jobs in China.
Similarly, 85.3 percent of participants responded that they In light of these gures, I believe it is impossible to argue
considered the overall business environment in South China to against the fact that business continues to boom in what is on-
be “Good,” “Very Good” or “Outstanding,” an increase over track to continue to be the world’s fastest growing economy.
last year’s result. 42.3 percent of participants, meanwhile, re-
ported that in their opinion the business environment had im- With best regards,
proved somewhat or greatly in the past 12 months and a further
38.9 percent reported that it had remained about the same. Harley Seyedin
President
In terms of planning and risk management, the biggest
perceived challenge to the operations of study participants e American Chamber of Commerce in South China
over the coming year is once again “Regulatory issues (Chinese Vice Chairman, China A airs
government).” Trailing behind in second, third, fourth and
e Asia Paci c Council of American Chambers of Commerce
fth places are “Local competition,” “Rising labor costs,”
“Foreign competition” and “Lack of quali able managerial
or specialist talent.” Results for the 3-year period are quite
similar, with only the last two concerns trading places.
Elsewhere, participants identi ed “Increasing in ation” as
one of their top policy-oriented concerns.
On the topic of regulatory issues, I rmly believe that
this is the largest impediment to massive investment across
China. From the perspective of foreign investors, the lack of
transparency—or even simply the perception of such a lack—
will continue to limit the number and scale of investments.
If foreign companies felt more con dent that they would be
6
