Despite facing a “significant performance downturn” last year, Chinese companies operating in the United States expect rising revenue trends in the long term, according to a survey.
The 11th Annual Business Survey on Chinese Enterprises in the United States was launched Monday at an event hosted by the China General Chamber of Commerce-USA (CGCC) on the sidelines of the SelectUSA Investment Summit, an annual US federal government program aimed at attracting foreign direct investment.
The CGCC conducted the survey in April and May of some 100 Chinese enterprises, including financial institutions, industrial firms and consumer discretionary companies, about their revenue in the US market in the past year and their future outlook.
According to Hu Wei, the chairman of the CGCC, who is also the CEO of Bank of China USA, the survey shows the following key trends: “Surveyed companies’ negative perceptions of the business and investment environment in the United States have increased, investment intentions have somewhat declined, but the goal of engaging in the US market remained clear.
“Chinese companies experienced a significant performance downturn in the United States last year, similar to the initial year of the pandemic, 2020, with an increase in the number of companies reporting declining profit margins. Pessimism about the future of US-China bilateral and trade relations continues to rise, but the overall expectations for long-term revenue trends remain optimistic,” the survey said.
“The overall revenue trend in 2023 continued the clear decline that began in 2022. This trend marks a notable shift from the strong rebound year seen in 2021.”
The survey found that 21 percent of the respondents saw revenue declines exceeding 20 percent last year, compared with 13 percent in 2022. It also found that the number of companies with losses in 2023 was 32 percent, similar to the 33 percent in 2020, which was the largest number in six years.
However, “a notable degree of long-term optimism persisted, with the majority expressing positive future revenue expectations”.
The survey showed that nearly 60 percent of Chinese enterprises in the US aimed to maintain stable investment levels, with 30 percent planning to increase investment. Only about one-seventh of companies intended to reduce investment.
Hu said, “Chinese companies have demonstrated outstanding resilience … adapting to the US market and achieving sustainable developments … regardless of prosperity or adversity”.
Jing Quan, the chargé d’affaires of the Chinese embassy in the US, said that some people are now advocating a “new Cold War” between China and the United States, while both sides should “firmly and loudly say no” to this concept.
“Efforts should be made to stabilize the general direction of the relationship between the two countries, provide more confidence, certainty and predictability for the people of the two countries and all walks of life, and set up positive expectations for the China-US relationship,” Jing said at the event.
“The Chinese embassy will continue to play a bridging role and work hard to serve the business community of the two countries and create a sustained good and stable business environment. I hope the US side will also move in the same direction,” he added.
Marisa Lago, under-secretary for international trade at the US Department of Commerce, said that the first meeting between the working groups she co-led with Chinese Vice-Minister of Commerce Wang Shouwen in April was an important milestone. Lago’s team is planning a second meeting in China later this year.
She said that resuming regular intergovernmental communications and exchanges “reduces the risk of misunderstandings and prevents escalation of irritants”.
“This direct communication allows both of our countries to raise very specific business issues that affect our businesses and workers and invest in them,” Lago said.
Johnson Qin, the chairman of the board and CEO of Shenzhen Capchem Technology Co Ltd, a battery manufacturer, told China Daily that it is normal for there to be cyclical fluctuations in the US-China commercial relationship.
Although there have been more challenges in recent years, he said he is encouraged by China and welcomed by the US overall.
“We brought technologies, capital and jobs to the US,” he said. “I’m still optimistic for the future.”
During a panel at the event, Bella Tu, the vice-president of MINISO Group, a company focused on the retail and wholesale of lifestyle products and toy products, said that her company is energized by the passion for “interest consumption” in the US.
“We went through a lot of market research and adjusted our strategy according to the characteristics of the US market, positioning our store as a global IP-collection store,” said Tu. “We plan to open more than 100 stores in the US by the end of 2024.”
Yujia Gu, the vice-president of HEYTEA USA, said that it is good news that US consumers are willing to pay for higher-quality tea beverages. “We would accelerate our store openings in the US and promote the localization of our business with consumer recognition at the core,” Gu said.
The survey offered some suggestions to Chinese companies in the US and Chinese companies entering the US, respectively, including looking at the environment objectively, finding comparative advantages, building long-term confidence, being well-prepared and utilizing multiple sources of support.