The country is considered to have a high return on investment (ROI), with 76 per cent of participating companies reporting a positive overall ROI in China, and over 90 per cent of companies considering China to be an important investment destination, according to the 2023 White Paper on the Business Environment in China and the 2023 Special Report on the State of Business in South China by AmCham South China.

Despite a moderate decrease in the proportion of companies reporting an increase in headcount in 2022, most companies are positive about their employment expansion plans in 2023. Over 50 per cent of participating companies gained over 30 per cent of their global revenue from China, with 45 per cent registering an increase in revenue from China. Companies’ profitability also showed signs of improvement in 2022, with 88 per cent of participating companies reporting gains in China.

Most companies consider China a critical part of their future strategic development plans, with 75 per cent planning to reinvest in China in 2023, says AmCham South China. A greater sense of optimism was found among participating companies towards their expected time to reach profitability, with most expecting to achieve profitability within two years.

The report found that companies are cautious about making large investments in China, with only 5 per cent reinvesting over $250 million in 2022. Guangzhou has been recognised as the top preferred investment destination in China for six years in a row. However, the report also revealed a trace of pessimism over the business environment in South China, with rising operation and labour costs identified as the biggest challenges faced by companies.

The trade volume between the US and China hit a new record high of $690.6 billion in 2022. However, less than 30 per cent of participating companies are optimistic about the future of the bilateral relationship in 2023, with 8 per cent fewer Chinese companies and 26 per cent more American companies expressing pessimism. The report estimates that companies will reserve $18.3 billion from profits for reinvestment in China in 2023 and the next three to five years, a decrease of almost 31 per cent compared to the previous year.

Fibre2Fashion News Desk (NB)