There was a time when American companies were lining up to take advantage of what China had to offer. Now, one in four are planning to leave, says a report by the American Chamber of Commerce in China (AmCham). My how things change.
Labor costs, inconsistent laws, corruption, pollution, and IP theft are some of the reasons given by companies who are having second thoughts about their China operations, says AmCham’s 2016 China Business Climate Survey Report, which surveyed over 450 U.S. companies.
“Our survey reflects that one in four companies are moving their operations,” said James Zimmerman, AmCham’s Chairman, in the above video by China Uncensored which provides a humorous summary of the report’s findings.
The report also found that 45 percent of respondents stated that they had flat or declining revenues last year compared to 2014.
“At the same time, the proportion of companies characterizing their business as financially profitable in 2015 fell to 64 percent — the lowest level in the last five years,” said the report. “Financial performance differed significantly among industries, however.”
Add to that over 85 percent of companies surveyed said they felt that foreign businesses are less welcome in the country than before.
“This response is consistent across industries, but is strongest among companies in the industrial and resources, and technology and R&D-intensive sectors, which report greater concern with the country’s overall regulatory environment,” said the report.
Corruption stayed at the top of the list of top business challenges for the second year in a row.
As noted by Chris Chappell in the China Uncensored video, the American companies leaving China won’t be returning to the U.S., but would be looking to relocate in low wage countries such as Vietnam, Thailand, and India.