Report: Companies eager to do business despite concerns over bilateral ties, performance dip and gloomy outlook
A sign advertises vacant retail space for lease in the Loop in Chicago, Illinois, on April 20. (PHOTO / AFP)
Editor's note: China-US relations have gone through thick and thin over the past decades. This page takes a close look at the economic problems faced by Chinese enterprises operating in the US as well as the Janus-faced China policy pursued by successive US administrations.
The financial performance of Chinese companies operating in the United States is slightly down, with a dour outlook in years ahead, according to an annual survey by a nonprofit organization, but they are still eager to do business in the country.
"Chinese companies in the US performed slightly worse than the previous year, with cautious expectations for subsequent developments," said a report released on Monday by the China General Chamber of Commerce-USA.
Another finding in the report, based on the 2023 annual business survey conducted in February and March by the CGCC, is that tensions in US-China relations and persistent inflation are top concerns for Chinese companies in the US.
"Chinese companies operating in the US continued to face an exceptionally complex environment," the report said.
"While challenges do exist, the cumulative synergy and the benefits of the partnership between the US and China far outweigh any risks," Hu Wei, chairman of the CGCC and president of the Bank of China's US branches, wrote in the report.
Abby Li, director of corporate communications and research at the CGCC and one of the report's authors, revealed the report's data, findings and suggestions.
Twenty-four percent of Chinese companies surveyed experienced a revenue decline of more than one-fifth; 19 percent expected their revenues in the US to decline over the next two years, compared with 14 percent in last year's survey.
Eighty-one percent of respondents were concerned with the bilateral tensions between the US and China, and 68 percent expressed concerns over inflation in the US and its economic impact. More than 80 percent of Chinese companies were satisfied (or neutral) with all aspects of the US business environment. Fluctuating business cycles in the past helped Chinese companies cope with short-term fluctuations.
Based on survey result analysis and interviews with senior management, the report made five recommendations for Chinese companies in the US: Do not let a crisis go to waste; build a systematic approach to increase the success rate of portfolio expansion; leverage the US market's propensity for innovation; embrace new digital tools; treat North America as a single market; and consider "regional expansion "to Canada and Mexico.
In an interview after the report launch, Li told China Daily that the impact of US-China relations on both Chinese enterprises in the US and US enterprises in China is significant and palpable, affecting their operations and strategies.
"In the current environment, Chinese enterprises in the US place great importance on adhering to US compliance standards, as this is crucial for international market operations," Li said. "For example, they invite third-party professional institutions and law firms to adapt to local US standards, terms and laws to ensure the lawful and healthy operation of their enterprises.
"Additionally, the Chinese companies contribute to social services and shoulder social responsibility, which are also crucial for them."
A trader reacts as a screen displays the Fed rate announcement in the New York Stock Exchange on Wednesday. (PHOTO / REUTERS)
A bridge role
Pin Ni, CGCC vice-chair and the president of Wanxiang America Corp, said the report reflects CGCC members' common voice: The enterprises all want to continue to invest more in the US and play a bridge role between the US and China; on the other hand, the pressure of the circumstances is relatively high.
"The recession in the US has just arrived, and it is a real challenge. The deterioration of US-China relations has a greater impact on everyone," he said.
"As long as the flow of people, logistics and capital is constant, the business opportunities will come. Such opportunities will bring value and benefit to both China and the US," Ni said.
"We have to do a lot of work in promoting US-China exchanges. Don't let the current difficulties stop our work. Don't give up. We are at the forefront, and if we give up, there will be a vacuum in US-China exchanges. Once such vacuum appears, there will surely be other forces and voices to fill it, which is not good for anyone."
There were several panel discussions after the report launch, whose participants included Chinese and US officials, CGCC leaders, and Chinese and US business executives.
They specified the difficulties encountered by Chinese companies in the US in recent years. Still, they expressed a positive attitude toward the future economic and trade relationship with the US.
Xu Xueyuan, the charge d'affaires at the Chinese embassy in Washington, described the US as an "investment hot spot" and said that the high volume of two-way trade reveals the sober mindset of the business community and the strong market forces.
"It also tells us one thing — winning cooperation has the support from the people. As an important force for Chinese modernization, Chinese businesses are of great significance to closer US-China trade ties and global economic recovery," she said.
Diane Farrell, deputy under secretary for international trade at the US Department of Commerce, said that the bilateral economic ties and investments have deepened business relationships between the US and China, offering opportunities to both their countries.
"Chinese companies, by our count, have invested over $53 billion in US facilities, supporting over 119,000 direct jobs in the United States."
Ben Jurjevich, the business development manager of BYD, a major Chinese conglomerate, said: "We still see a very strong future in the US. So, you know, we still have a very strong market share for transit buses. We have some new products we're very excited about in the US, including our electric school bus. And so, business is good."
The professional "helpers" providing services to Chinese companies entering and operating in the US are also confident.
"As part of the US-China business community, it's our job to try and weave together the different strands of the different communities to try and sort of bridge them together," said Lanier Saperstein, the banking partner and co-chair of the US-China Practice Group at Dorsey &Whitney LLP.
Better understanding
"We don't necessarily need to agree on everything," he said. "China and the US have very different systems. That's OK. They don't need to have our system, and the US doesn't need to adopt China's system. But I do think there are opportunities to do business and to cooperate and have a much better understanding of one another."
Saperstein said the business community could help smoothen bilateral relations.
Philip Berkowitz, who is working as US practice group leader of Littler Mendelson, an employment and labor law firm, said these are challenging times for Chinese companies in the US.
"But I would say that overall, according to my work experiences, Chinese businesses are working very hard to build their businesses here and to comply with the law," he said. "They understand the importance of compliance. They very much want to get things right in the United States.
"They're under real scrutiny from regulators and the press. And I think they're doing an incredible job with their compliance testing and with their commitment to the rule of law here in the US," he said.
