Survey: Performance of US companies in China worsened as economy slowed

BEIJING, China – U.S. companies in China say revenue and profits fell last year as the economy slowed and they faced more difficult government regulation, a business group reported Thursday.

The report by the American Chamber of Commerce in Shanghai added to complaints that Beijing might be trying to shield Chinese companies from foreign rivals in possible violation of market-opening pledges.

U.S. companies that responded to an annual survey said their performance declined for a second year, though many said they were profitable and expect to grow this year. The number that said they were profitable declined to 73 per cent from 2011’s 78 per cent.

Business conditions are changing as China’s economic growth slows from double-digit rates of the past decade and the government tries to reduce reliance on trade and investment by encouraging service industries and domestic consumption.

China’s economy expanded by 7.8 per cent last year, well above the rates of the United States, Europe and Japan, but its weakest annual performance since the 1990s.

“The ‘new normal’ for U.S. companies in China will be characterized by a maturing economy that is likely to generate weaker growth returns and rising business challenges,” the chamber said.

Companies also find the regulatory environment “increasingly challenging,” with more than two-thirds of those responding saying it was either not improving or deteriorating, the group said.

Other business groups including the American Chamber of Commerce in China and the European Chamber of Commerce in China have reported similar complaints by member companies about regulatory obstacles.

The Shanghai chamber appealed to Beijing to make its “vague regulatory framework” simpler and easier to understand.

“Reports from American managers competing in China indicate that some domestic firms take advantage of unclear rules, laws and regulations to give them a competitive leg up,” the report said.