US-CHINA BUSINESS COUNCIL Member Survey

Transcription

1 Member Survey

2 Executive Summary Top 10 Challenges

3 US-China Trade Tensions are Affecting American Companies THE RELATIONSHIP BETWEEN THE US AND CHINESE GOVERNMENTS IS THE TOP CONCERN FOR A MAJORITY OF COMPANIES DOING BUSINESS IN CHINA AND NOT JUST BECAUSE THE ISSUES ARE IN THE NEWS EACH DAY. 58% 73% Yes 27% No Has Your Company s Business with China Been Affected by Current US-China Trade Tensions?

4 Impact of US-China Trade Tensions on Business Increased scrutiny from regulators in China Delay or cancellation of investment in the US or China due to uncertainty Lost sales due to tariffs that have been implemented by China Lost sales due to customer uncertainty of continued supply Shifts in suppliers or sourcing due to uncertainty of continued supply Increased scrutiny from regulators in the US Lost sales due to concerns about doing business with American companies Uncertainty due to trade tensions Increased sales or opportunities Lost sales due to tariffs that have been implemented by the US Other 1 28% 1 11% 8% 4% Multiple responses allowed.

5 Regulatory Issues in China Continue to Be a Significant Challenge AMERICAN COMPANIES CONTINUE TO CITE REGULATORY ISSUES AMONG THEIR TOP CHALLENGES IN CHINA. Signs of Protectionism in China 10% Not seeing signs of protectionism Trade remedy cases Competition enforcement 8% Other Negative media coverage in China 28% 4% 14% Unequal adjudication 1 Government procurement market access 1 Direct subsidies, preferential financing, etc. 21% Gov t pressure to favor Chinese companies 27% Secure & controllable requirements 27% Standards setting Foreign investment barriers Tighter enforcement of rules Innovation policies Licensing and regulatory approvals 30% 34% 3 48% 58% Multiple responses allowed.

6 View of the Business Climate in China Over 10 Years Somewhat Optimistic Optimistic 4% 1% 8% Somewhat Pessimistic Neutral 4% 3% 7% 1% 14% Pessimistic 7% % 37% 4 49% 54% 5 8% 9% 11% 1 18% 4 51% % 57% 58% 48% 39% 31% 24% 30% 3 33% Issues Impacting Five-Year Outlook 63% 49% 54% 34% 28% US-China trade conflict Costs Profitability of China operations Domestic market growth Competitive environment Policy and regulatory environment

7 58% Foreign Companies Seeing Tangible Benefits from PRC Economic Reforms Has Made in China 2025 Impacted Your Company s Operations? 53% Very concerned Somewhat concerned Yes, significant benefits 4 No benefits 3 5 Yes, some benefits Positive Impact 20% Negative Impact 74% No Impact Level of Concern About China s Preferences for Domestic Companies 1 Not concerned Positive Impact

8 China Remains an Important Market for US Companies CHINA S IMPORTANCE AS A MARKET FOR AMERICAN COMPANIES SHOULD NOT BE UNDERESTIMATED. China s Prominence in Overall Company Strategy 4% 7% 10% 1 71% 78% 67% 74% 1% 9% 71% Not a Priority One of Many Non-Key Priorities % 14% 19% % Among Top Five Priorities Top Priority Resource Commitment for the Next Year 11% 8% 8% 38% 4 44% 44% 50% 51% 4 48% 51% Will be Curtailed Will Remain Unchanged Will Accelerate

9 2018 Revenue from China is Expected To... 9% Decrease Revenue from China Business in Past Year Increased Remain Unchanged % Increase 1 Unchanged 2 23% 73% 8% 7% 9% 79% Decreased 87% 10% 11% Are Your China Operations Profitable? 17% 1 83% % 90% % 97% 2018 No Yes

10 Profit Margin of China-Based Operations Compared to Overall Operations Better Same Worse % % 20% % 19% 20% % % 30% 39% 4 27% 31% Sa m 38% 23% 39% % Wors e e 3 29% 3 33% View of China s Policy Environment vs. Other Emerging Markets 31% % 29% et te r 38% 41% B

11 Primary Restraint on Increased Profitability 3% Other Insufficient capacity to meet demand Insufficient managerial or other personnel 7% Competition from international competitors Rising costs PRC government policies or regulations 28% Competition from domestic competitors 39% Objectives for Existing and Future Investments in China 9 Access or serve the Chinese market 2 Export platform to serve markets other than US Export platform to serve the US market 3% Other Multiple responses allowed.

12 Intellectual Property Rights 4% 4% 1% 3% 1% Over the Past Year, China s Protection of IP Has... Greatly Deteriorated Somewhat Deteriorated Remained Unchanged Somewhat Improved Greatly Improved 57% 58% 57% 37% 3 3 3% % % 38% Impact of China s Level of IP Enforcement on Types of Activities Companies Undertake in China 17% No impact Other 20% Limits products sold in China 28% Limits products manufactured in China 30% Limits products co-manufactured or licensed in China 44% Limits R&D activities in China Multiple responses allowed.

13 Competition with Chinese Companies Who Are Your Competitors in China? Chinese non-state-owned and private companies US and other foreign companies 94% 88% Chinese state-owned enterprises (SOEs) Are State-Owned Competitors Receiving Tangible Benefits? 68% 3% No Types of Benefits SOE Competitors Receive 68% Preferential government financing 58% 59% Preferential licensing and approvals Preferential access to government contracts 47% Tax benefits 47% Preferential treatment in policy enforcement 39% Yes, Have Concrete Knowledge 3 Lower land costs than are available to foreign companies 3 Other financial benefits 3 Suspect, But Uncertain Are Non-SOE Chinese Competitors Receiving Tangible Benefits? 31% No Lower utility costs Other 19% Yes 50% Suspect, But Uncertain 1 9%

14 Methodology US- and China-Based Executives Cross-Sector Representation Long Experience in China