Chinese and U.S. flags fly near the Bund before a U.S. trade delegation meets with a Chinese trade delegation in Shanghai, China, July 30, 2019.
Ally Song | Reuters
BEIJING – A record percentage of U.S. companies in China are accelerating plans to relocate manufacturing or sourcing, according to a business survey released Thursday.
About 30% of respondents are considering or starting such a diversification in 2024, up from a previous high of 24% in 2022, according to the American Chamber of Commerce in China’s annual survey.
This is higher than the 23% share reported in 2017, when President Donald Trump began his first term and began raising tariffs on Chinese goods.
In addition to U.S.-China tensions, “one of the big impacts we’ve seen in the last five years has been the coronavirus and how China has closed off from the rest of the world because of the coronavirus,” he told Beijing. said Michael Hart, president of AmCham China. he told reporters on Thursday.
“One of the biggest catalysts was people realizing they needed to diversify their supply chains,” he said. “That trend shows no signs of slowing down.”
China has restricted international travel and locked down parts of the country to limit the spread of the disease during the coronavirus pandemic.
While India and Southeast Asian countries remain the most popular destinations for relocating production, the survey showed that 18% of respondents are considering relocating to the United States in 2024, up from 16% a year earlier.
The vast majority of American companies did not plan to diversify. According to the survey, just over two-thirds of respondents, or 67%, said they were not considering relocating their manufacturing industry, down 10 percentage points from 2023.
The latest AmCham China survey surveyed 368 members from October 21st to November 15th, and Trump was re-elected as US president on November 5th.
President Trump this week confirmed plans to raise tariffs on Chinese goods by 10%, saying the tariffs could go into effect as early as February 1. This is in line with the US’s increasingly tough stance towards China. The Biden administration has emphasized that the United States is competing with China and has imposed sweeping restrictions on the ability of Chinese companies to access high-end American technology.
More than 60% of respondents said U.S.-China tensions are the biggest challenge to doing business in China over the next year. Competition from local state-owned enterprises and privately owned Chinese companies is the second-biggest challenge for U.S. companies doing business in China, according to the survey.
slowing economic growth
In addition to geopolitical pressures, consumer spending has slumped since the pandemic, slowing growth in the world’s second-largest economy. In late September, Chinese authorities began stepping up efforts to boost growth and stem the real estate slump.
For the third consecutive year, more than half of AmCham China respondents said the country was not profitable, adding that the region was becoming less competitive in terms of margins compared to other global markets. .
According to the survey, the proportion of companies that do not list China as a priority investment destination rose to 21%, doubling from pre-pandemic levels.
But looking to the future, technology, industrial and consumer companies said they see domestic consumption growth as their biggest business opportunity in 2025, according to the survey. Services companies said the biggest opportunity is for Chinese companies looking to expand overseas.
Hart noted that many members remain optimistic about Chinese consumers, calling it a “large and important market.”
