BEIJING - American
companies in China are prospering as they gain
more access to domestic markets, despite the
ongoing trade frictions between the two countries,
according to an American Chamber of Commerce
(AmCham) survey released February 16.
China's increasing market growth and
improved regulatory environment have contributed
to more AmCham-member companies producing for the
domestic market and trying to
become wholly foreign-owned
enterprises (WFOEs), said the report, which is
based on seven years of annual AmCham polls in
China.
About 38% of respondents in 2000
cited market access restrictions as a top-three
barrier to profitability, while 66% reported
negative effects from business scope restrictions.
However, from 2002 to 2005, two-thirds of the
respondents were successful in expanding products
and services offered in China.
"Market
access, while it still is a challenge, has become
much easier," Teresa Woodland, co-chair of
AmCham's public policy development committee, said
at a news briefing held for the report's release.
She said the issue had dropped off the list of the
companies' top-10 challenges of doing business in
China.
Members were also increasingly more
likely to have WFOEs, with 60% reporting one in
2005, versus 33% in 1999. Conversely, the
percentage of AmCham members with joint ventures
dropped to 27% in 2005, versus 78% six years
prior. "That really exemplifies how things have
changed here. Companies really do have a lot more
options," Woodland said.
According to the
survey, companies in recent years have also been
able to introduce more products and services to
the Chinese market. About 83% of respondents in
2005, versus 60% in 1999, listed producing goods
and services in China for the local market among
their top three reasons for entering China.
For the past three years, three-quarters
of companies surveyed were making a profit, more
than in previous years, according to the survey.
However, competition-based issues have
been the top challenge faced by AmCham members in
China. This trend is putting pressure on profit
margins. In 2005, 70% of respondents reported
increased competition from both foreign and local
companies.
On February 14, the US Trade
Representative Office released its first
top-to-bottom review of Sino-US trade in five
years. The review had positive comments on trade
growth between the two countries in the past five
years, but Washington also blamed China for its
large trade deficit.
AmCham-China
president Charles Martin said the chamber mostly
agreed with the report's conclusions, noting
US-China commercial relations are quite robust. As
illustrated in the chamber's report, China is
opening its markets, while US firms as well as the
American and Chinese economies were benefiting, he
said.
The US figures released last week
showed the US trade deficit with China rose 24.5%
last year, to US$201.6 billion. China reported
that its surplus with the US last year was 114.2
billion because of different statistical
standards.
The USTR report said it would
take a tougher stance and set up a task force to
ensure China abided by trade laws. In terms of
boosting US business in China, however, the US
"must move to a much higher level of trade
promotion on behalf of small and medium-sized
companies", Martin said.
Federal and state
governments and industry and trade associations
needed to open offices in China to promote their
products, he said. "There is a large communication
gap at present. China's marketplace is hungry, but
our SMEs [small and medium-sized enterprises] need
help to feed it," he said. "US efforts are modest
compared to those of the EU and inadequate given
the opportunities available."
Martin
suggested using the World Trade Organization's
dispute resolution process only as a last resort.
"That process is lengthy and difficult and should
be used only when other efforts have failed," he
said, noting that bilateral negotiations, such as
those used to solve last year's textile dispute,
were fast and mutually beneficial.
Even
so, Martin said important problems remained in
areas such as intellectual property rights
enforcement and transparency. "Much more needs to
be done in these areas," he said. "They require
commitments of substantial Chinese resources."
