WASHINGTON, Wed Oct 10, 2012 – Many U.S. companies are less optimistic about doing business in China even though sales there are still rising, and most of those firms are planning to increase investment, according to an annual survey of business executives released on Wednesday.
“The China market continues to deliver sales growth and profitability for U.S. companies, but rising costs, increasing competition, and persistent market access and regulatory barriers are tempering the optimism of U.S. companies doing business with China,” the U.S.-China Business Council said.
Forty-five percent of the 111 companies surveyed said they were less optimistic than three years ago about the business environment in China, compared to 26 percent that were more optimistic and 29 percent that were unchanged in their view.
At the same time, 89 percent, the highest ever in the seven-year history of the business group’s member survey, said they made a profit in China in 2011 and two-thirds said their revenues grew by at least 10 percent.
The survey comes amid growing U.S. frustration that many parts of China’s economy remain off-limit to foreign investment 11 years after it joined the World Trade Organization. China also is preparing for a once-in-a-decade leadership change that could keep any new economic openings on hold for a while.
It was taken before the House of Representatives Intelligence Committee urged American companies on Monday to avoid doing business with China’s leading telecoms equipment manufacturers, Huawei Technologies Co. and ZTE Corp. because of security concerns.
The panel’s recommendation has raised fears of possible Chinese retaliation against U.S. firms.
While two-thirds of survey respondents said they planned to increase investment in China in the next 12 months, 17 percent said they had halted or delayed investment plans.