2021-06-01-安永-2021_Annual_Business_Survey_Report_on_Chinese_Enterprises_in_the_United_States_86页_26mb

2021 Annual Business Survey Report on Chinese Enterprises in the United States

Core Content

This report presents the findings of the eighth Annual Business Survey conducted by China General Chamber of Commerce – USA (CGCC) in early 2021, based on responses from 183 Chinese companies operating in the U.S. and qualitative insights from executive interviews. The survey highlights the impact of the COVID-19 pandemic, evolving U.S.-China relations, and the ongoing challenges and opportunities faced by Chinese enterprises in the U.S. market.

Main Views and Key Findings

Impact of the Pandemic

• Negative Effects: The pandemic significantly impacted the performance of Chinese companies in the U.S., with half experiencing minor negative effects and 35% facing severe impacts.
• Sector Variations:
  • Consumer-facing sectors (e.g., retail, real estate) were most affected.
  • Health care and telecommunications showed some positive impact due to pandemic-related demand.
  • Financial services, energy, and utilities were less affected or unaffected.
• Employment Changes:
  • Some sectors saw increased hiring and extended working hours.
  • Many others had to downsize, cut hours, or reduce salaries to manage through the crisis.

Recovery Outlook

• Recovery Expectations:
  • The time frame for recovery to pre-pandemic performance levels varies by sector.
  • Real estate is expected to take the longest time to recover.
  • A small percentage of companies anticipate performance may decline over the next 1–3 years.
• Overall Recovery Momentum:
  • The perception of a worsening U.S. business environment has increased.
  • 79% of surveyed companies believe conditions have worsened compared to the previous year.
  • 29% view the worsening as substantial.

Strategic Adjustments

• Digital Transformation:
  • Companies accelerated digital investments and product innovation.
  • These efforts aim to enhance customer engagement and operational efficiency.
• Risk Management:
  • Companies have focused on identifying and managing emerging risks.
  • A flexible cost structure has been emphasized to adapt to changing conditions.
• Compliance and Legal Challenges:
  • Compliance with U.S. laws and regulations has become a top priority.
  • The main compliance challenges shifted from lack of knowledge to navigating complex regulations and potential legal conflicts between the U.S. and China.
  • Companies are investing more in strengthening compliance systems and procedures rather than relying solely on training or third-party cooperation.

Parent Company Commitment

• Continued Investment:
  • Parent companies remain committed to the U.S. market, even accepting lower profitability.
  • 65% of surveyed companies reinvest all profits into U.S. operations.
  • The U.S. market is becoming a more significant contributor to global revenues for Chinese enterprises.

Branding and Public Perception

• Enhanced Branding:
  • Companies are investing in brand awareness and recognition.
  • These efforts are aimed at countering anti-China/Asia sentiments in public discourse.
• Public Relations:
  • Increased PR investment is seen as a way to improve understanding of Chinese companies among U.S. market participants.

Sector-Specific Observations

• Financial Services:
  • Companies focused on risk governance, credit and liquidity management, and innovation in areas like green finance.
  • 41% offer wholesale banking services, and 36% provide trade finance services.
• Energy and Electric Vehicles (EV):
  • Companies are developing long-term low-carbon strategies to address climate change.
  • Some are exploring opportunities in the U.S. EV sector due to technological advancements.
• Access to U.S. Capital Markets:
  • The U.S. remains a top choice for IPOs to gain global exposure and access liquid markets.
  • Companies continue to seek ways to enhance their visibility and credibility in the U.S.

Key Information

• Survey Methodology:
  • The survey was conducted in March and April 2021, with 183 responses from U.S. operations of Chinese companies.
  • CGCC collaborated with EY to analyze the data and draft the report.
• Demographics:
  • The majority (59%) of surveyed companies are not owned by publicly traded entities.
  • Only 9% are already listed or planning to go public in the U.S.
  • Companies used a variety of entry strategies, including greenfield investments (69%), M&A (26%), and joint ventures (26%).

Conclusion

Despite the challenges posed by the pandemic and U.S.-China tensions, Chinese companies in the U.S. remain optimistic about the future of the business environment. They are adapting their strategies to focus on digital transformation, compliance, and brand building, while maintaining a long-term commitment to the U.S. market. The report underscores the importance of continued dialogue and cooperation between the two business communities to foster mutual understanding and growth.