American companies in China count costs of trade war |

American companies in China count costs of trade war

SHANGHAI -- American companies had a difficult year in China in 2019 amid their country's trade war with Beijing and slowing economic momentum, as those reporting revenue growth or profitability plunged, according to a new survey published Tuesday. The annual poll by the American Chamber of Commerce in China was conducted in October and November, before the U.S. and China signed their "phase one" truce in their tariff battle and before the new coronavirus brought business in China to standstill for much of February. "The fight against COVID-19, ongoing bilateral negotiations and a slowing Chinese economy make for challenging business conditions," said Greg Gilligan, AmCham China chairman. But the market panic of COVID-19 will eventually subside, and 2020 will be a critical year for businesses and policy makers with significant impact on the trajectory of U.S.-China relations," said Gilligan, who is also managing director of golf company PGA Tour China. Asked about the financial performance of their China business, just 61% of the survey's 372 respondents said they were profitable last year. This was a record low reading since AmCham began asking the question in 2001 and compared with 69% in 2018. Along the same lines, only 46% of companies said their China revenues rose last year. This was the first time a minority had reported revenue growth since 2010 and compared with 62% seeing higher sales in 2018. The share reporting a revenue decline in 2019 climbed to 21% from 12%, with the balance of respondents indicating sales were "comparable" with 2018. Following the COVID-19 outbreak, U.S. companies in China are reviewing their outlook and priorities for the year, AmCham said, with a growing number pessimistic due to challenging business conditions including the ongoing trade tensions. While the full impact of the coronavirus remains unclear, Gilligan acknowledged it has caused disruptions to the movement of people and products. In a flash survey in mid-February, a majority of the 169 respondents said it was too soon to count the costs of the shutdown though 20% said they were losing at least 100,000 yuan ($14,400) a day. A majority of the respondents implemented work-from-home policies beginning in February, with only one-third then expecting a return to normal business operations by the end of March. The Chinese authorities, however, have been keen for companies to get back up and running. Hubei Province, the center of the outbreak and home to General Motors and General Electric factories, is to officially reopen for business on Wednesday, ending a lockdown imposed Jan. 23. China remained a top priority for a majority of the respondents in the earlier AmCham survey, with nearly two-thirds saying they felt they are treated equally with local companies. A majority also said they had seen improvements in the enforcement of intellectual property rights, a key issue in U.S.-China trade tensions, with 81% regarding technology transfers to China as voluntary rather than an official requirement of operating in the country.
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