Page 8 - 2018 White Paper on the Business Environment in China
P. 8
8 White Paper on the Business Environment in China
President’s Message
Many American businesses have found further ripple effects, FIEs account for nearly 90% of
opportunities in China ever since the Shanghai’s high-tech output.
country opened its doors to foreign investors in 1978.
The relationship has produced untold mutual benefits for Meanwhile, this year’s volume continues to reflect
40 years. As fruit of its reform and opening-up policies, China’s economic dynamic and its intentional movement
China became the manufacturing hub for the world. from an export-based economy to a consumer-based
Foreign companies could produce their products much economy. While in 2003 our study showed that less than
cheaper in China than they could in their home countries. 23% of surveyed companies were selling their goods and
Foreign businesses shipped their technologies, designs, services produced in China to China, this year’s study
management, and sometimes raw materials to China shows that 73.3% of them are now primarily producing
where factory workers built the final products. As a goods and services in China for the Chinese market—and
result of the influx of jobs, China largely drove the United this market is rapidly changing.
Nation’s millennium goal of halving extreme poverty while
simultaneously creating a growing domestic middle-class Although most foreign companies have found success
that is hungry for Western products and services. in their marketing for first tier cities where the middle
economic classes have embraced Western products, an
China’s growth can therefore be attributed largely entirely different market is beginning to open up in second
to foreign investment. With this in mind, the American and third tier cities as well. These markets have different
Chamber of Commerce in South China created its annual tastes and needs and often buy online because walk-in
White Paper on the Business Environment in China to help stores are not readily available. Because the domestic
foreign businesses navigate the most dynamic—and market is opening rapidly, this year’s White Paper examined
sometimes challenging—market in the world. over a hundred different types of products and services.
Many—such as green architecture, pet accessories, online
Our White Paper, which also incorporates our Special games, and movie industry—have found their way into
Report on the State of Business in South China, has become this annual publication for the first time. Everything in this
an annual milestone for the American Chamber of edition focuses on the future needs of both the Chinese
Commerce in South China. We believe this year’s White market and foreign investment.
Paper is the most comprehensive and up-to-date edition
we have ever published. It represents the consolidation Chinese President Xi Jinping said that in the coming
of the analysis of thousands of pages of the most recent five years China will import $8 trillion of goods and attract
regulations issued by governments and research and $600 billion of foreign investments. All this is expected to
reports from the media, academic, and business experts create a bigger market, more capital, more products, and
from both sides of the Pacific Ocean. We see our mission more business opportunities for foreign investors. One of
with this White Paper as describing the current state the smartest things the Chinese government has done
of China’s economy as an interested, but objective, to facilitate this is to expand the number of Free Trade
participant. I have been told by various stakeholders that Zones (FTZs). A remarkable increase in the number of
this approach is uncommon, but welcome. Special Report respondents showed interest in setting up
new offices or facilities in the free FTZs in South China,
As detailed in Part 1.2 of this White Paper, foreign and of which more than 55.2% of respondents indicated that
American companies help generate one-third of China’s they favored Guangdong Nansha FTZ, followed by its
GDP and 27% of its employment. U.S. companies and counterparts in Qianhai and Hengqin.
their ripple effects through China’s economy contribute
more than 180 times the value of the usual measure of China remains popular for international investment
USFDI inflow, and 11 times the net profit of U.S. firms, due to its potential for global market growth. For most
to China’s GDP each year. Foreign invested enterprises of the respondents (53.3%), China accounted for the
(FIEs) plus their ripple effects account for well over 1/2 top spot in their global investment plans, while only
of GDP and employment of Shenzhen. In Shanghai FIEs about 10% of respondents viewed China in a lower
directly account for 2/3 of trade and industrial output, 1/3 position in their global investment plan. Most foreign
of employment and tax revenue and, without including investments are still heading toward those areas with
8
President’s Message
Many American businesses have found further ripple effects, FIEs account for nearly 90% of
opportunities in China ever since the Shanghai’s high-tech output.
country opened its doors to foreign investors in 1978.
The relationship has produced untold mutual benefits for Meanwhile, this year’s volume continues to reflect
40 years. As fruit of its reform and opening-up policies, China’s economic dynamic and its intentional movement
China became the manufacturing hub for the world. from an export-based economy to a consumer-based
Foreign companies could produce their products much economy. While in 2003 our study showed that less than
cheaper in China than they could in their home countries. 23% of surveyed companies were selling their goods and
Foreign businesses shipped their technologies, designs, services produced in China to China, this year’s study
management, and sometimes raw materials to China shows that 73.3% of them are now primarily producing
where factory workers built the final products. As a goods and services in China for the Chinese market—and
result of the influx of jobs, China largely drove the United this market is rapidly changing.
Nation’s millennium goal of halving extreme poverty while
simultaneously creating a growing domestic middle-class Although most foreign companies have found success
that is hungry for Western products and services. in their marketing for first tier cities where the middle
economic classes have embraced Western products, an
China’s growth can therefore be attributed largely entirely different market is beginning to open up in second
to foreign investment. With this in mind, the American and third tier cities as well. These markets have different
Chamber of Commerce in South China created its annual tastes and needs and often buy online because walk-in
White Paper on the Business Environment in China to help stores are not readily available. Because the domestic
foreign businesses navigate the most dynamic—and market is opening rapidly, this year’s White Paper examined
sometimes challenging—market in the world. over a hundred different types of products and services.
Many—such as green architecture, pet accessories, online
Our White Paper, which also incorporates our Special games, and movie industry—have found their way into
Report on the State of Business in South China, has become this annual publication for the first time. Everything in this
an annual milestone for the American Chamber of edition focuses on the future needs of both the Chinese
Commerce in South China. We believe this year’s White market and foreign investment.
Paper is the most comprehensive and up-to-date edition
we have ever published. It represents the consolidation Chinese President Xi Jinping said that in the coming
of the analysis of thousands of pages of the most recent five years China will import $8 trillion of goods and attract
regulations issued by governments and research and $600 billion of foreign investments. All this is expected to
reports from the media, academic, and business experts create a bigger market, more capital, more products, and
from both sides of the Pacific Ocean. We see our mission more business opportunities for foreign investors. One of
with this White Paper as describing the current state the smartest things the Chinese government has done
of China’s economy as an interested, but objective, to facilitate this is to expand the number of Free Trade
participant. I have been told by various stakeholders that Zones (FTZs). A remarkable increase in the number of
this approach is uncommon, but welcome. Special Report respondents showed interest in setting up
new offices or facilities in the free FTZs in South China,
As detailed in Part 1.2 of this White Paper, foreign and of which more than 55.2% of respondents indicated that
American companies help generate one-third of China’s they favored Guangdong Nansha FTZ, followed by its
GDP and 27% of its employment. U.S. companies and counterparts in Qianhai and Hengqin.
their ripple effects through China’s economy contribute
more than 180 times the value of the usual measure of China remains popular for international investment
USFDI inflow, and 11 times the net profit of U.S. firms, due to its potential for global market growth. For most
to China’s GDP each year. Foreign invested enterprises of the respondents (53.3%), China accounted for the
(FIEs) plus their ripple effects account for well over 1/2 top spot in their global investment plans, while only
of GDP and employment of Shenzhen. In Shanghai FIEs about 10% of respondents viewed China in a lower
directly account for 2/3 of trade and industrial output, 1/3 position in their global investment plan. Most foreign
of employment and tax revenue and, without including investments are still heading toward those areas with
8
