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Survey: US firms in shift to services sector
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With China boosting its efforts on economic restructuring, United States companies on the Chinese mainland are focusing on the services sector, finding good opportunities there, a survey by the American Chamber of Commerce in Shanghai has showed.
Revenue from the services sector accounted for 52 percent of the total income among US companies in China last year, according to the Chamber’s 2013-2014 China Business Report. It represented a sharp increase of 11 percentage points over the 2012 figure.
The growing importance of services to the bottom line was in contrast to manufacturing, which dropped 10 percentage points in 2013 to make up only 37 percent of firms’ total revenue.
Among the nearly 400 American firms that responded to the survey, 67 percent reported increased revenues in 2013, and 74 percent said their China operations were profitable.
“The experiences and activities of US companies in China are more than ever resembling developed markets,” the report released yesterday said. “More companies are involved in the services sector, and there is a continuing shift from the pursuit of manufacturing for exports towards producing and distributing goods and services for the domestic market.”
Also, the survey found a greater number of US small and medium-sized enterprises in China, or SMEs that have 500 or fewer employees worldwide. About 37 percent of companies identified themselves as an SME in 2013, compared with only 26 percent one year ago. “China’s improved infrastructure and increasing transparency, combined with a drawn-out economic recovery in the US, all contributed towards attracting companies from a broad range of sizes to the market,” the report said.
Kenneth Jarrett, president of AmCham Shanghai, said the US was strong in many services like financing and retail that China’s leadership has prioritized in the country’s economic restructuring.
Robert Theleen, chair of AmCham Shanghai and chairman of ChinaVest, said more companies were setting up here with China demonstrating its commitment to further economic liberalization through initiatives like the Shanghai free trade zone.
The survey showed 72.1 percent of respondents viewed the city’s FTZ as a positive development for foreign business in China, but 46.6 percent said they had not considered establishing operations in the zone, partly due to unclear policies that made it difficult to produce a concrete business plan for reporting to their US headquarters.
While fairly optimistic toward the future, US businesses still found a number of challenges in China, including rising costs and increased competition, the report said.
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