SCMP Article: Some reason for optimism???
Tuesday, April 3, 2001
US firms see better mainland margins
MARK O'NEILL in Beijing
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Three-quarters of United States companies in China expect profit margins to improve this year and more than 80 per cent plan to expand their operations, according to a survey published yesterday by the American Chamber of Commerce in China.
The survey was part of the chamber's 2001 white paper, its third annual report on US business in China. The report, drawn up after extensive talks with the chamber's 650-member companies since July last year, was presented to government economic ministries last week.
About 160 companies responded, of which 61 per cent said their profit margins would improve this year over 2000, with 14 per cent saying they would improve substantially.
Asked about five-year business outlooks, 45 per cent were optimistic, 46 per cent cautiously optimistic and 8 per cent neutral. On their future plans, 61 per cent said they would expand gradually, 24 per cent expand rapidly and 9 per cent no change.
On their biggest headaches, 67 per cent cited bureaucracy, 56 per cent the difficulty of attracting, developing and retaining talented staff, 43 per cent transparency, 42 per cent corruption and 38 per cent market access.
Chamber chairman Tim Stratford said the business environment was difficult but better than five years ago.
"Foreign businesses have become more sophisticated and are recruiting better talent. The government has become more pragmatic. The nature of our dialogue with Chinese officials has improved over the last five years," he said.
"Over the next five to 10 years, China's economy will have the highest growth in Asia, which you will not see in Japan or South Korea. As China's economy grows, there will be more [business] opportunities."
Mr Stratford said reforms to which China was committed by membership of the World Trade Organisation were critical for the country's continued economic development and would benefit US firms by fostering a more transparent and predictable business environment, and dramatically expanding market access for foreign goods, services and farm products.
"Given the breadth and depth of the numerous commitments made by China during the negotiation process, full compliance will not be easy and will not be achieved overnight.
"Over the next six years, hundreds of old laws and regulations at the national and local level must be amended to become WTO-consistent."
Mr Stratford said Chinese leaders faced the task of maintaining employment and family incomes at socially acceptable levels as inefficient state-owned enterprises met foreign competition pressures.
"If employment gets out of hand and if a viable safety net cannot be established and maintained, then Chinese leaders may be forced to choose between domestic turmoil and deferring implementation of some of their WTO commitments," he said.
" Success seems to be largely a matter of hanging on after others have let go." ~ William Feather
