Key Points:
- AmCham South China’s report reveals that 76% of companies plan to reinvest in China in 2024, focusing on sales, marketing, and business development.
- The study includes companies from various countries and regions, with American companies representing nearly half of those studied.
- 86% of companies affirm they will not decouple from the Chinese market due to trade tensions.
- Guangzhou has maintained its position as the top investment destination in China for seven consecutive years.
A recent report released by the American Chamber of Commerce in South China (AmCham South China) on Tuesday indicates that a majority of the 183 companies studied express optimism about the growth of the Chinese market. This annual special report on the state of business in South China is considered a crucial insight into China’s business environment, marking its 20th release by AmCham South China this year.
According to the report, 76 percent of the companies studied plan to reinvest in China in 2024, reflecting a positive outlook on the Chinese market. Among those planning to reinvest, 45 percent state that their primary investment areas will focus on sales, marketing, and business development. Other key investment areas include research and development, automation, and productivity development.
The enterprises studied in the report come from various countries and regions, with wholly foreign-owned enterprises accounting for over half. American companies represent nearly half of the businesses included in the study. Notably, 86 percent of the companies affirm that they will not decouple from the Chinese market due to trade tensions between China and the United States. In 2023, 62 percent of the companies studied chose not to shift their investments out of China, with 66 percent of American companies expressing commitment to the Chinese market.
The potential growth of the Chinese market emerged as the primary driver for increasing investments in China or shifting investments from other markets to China. This was followed by the industrial cluster effect and preferential policies, according to Harley Seyedin, the President of AmCham South China.
Over half of the companies studied believe that their overall return on investment (ROI) in China is better than their overall return on global investment. The report highlights that 88 percent of the companies studied have already achieved profitability in China, with 46 percent reporting meeting their budget expectations. American companies, in particular, have performed well in China, with 90 percent achieving profitability.
The report also reveals that 57 percent of the foreign companies studied consider China as one of their top three investment locations, showing a 5 percent increase from 2022. Guangzhou, the capital city of Guangdong province, has maintained its status as the top investment destination in the country for seven consecutive years, followed by Shenzhen, Shanghai, and Beijing.
Furthermore, the overall business environment in South China has received positive feedback, with 75 percent of companies considering it “excellent” or “good.” More than half of the companies studied note an improvement in the business environment in South China, indicating a positive trend compared to 2022.
