普华永道-2021年中国商业环境调查EN_84页_2mb

2021 AmCham Shanghai China Business Climate Report Summary

Core Content

This report, published by AmCham Shanghai in collaboration with PwC, provides insights into the business climate in China from the perspective of American multinational companies (MNCs). Conducted between June 15 and July 15, 2021, the survey received responses from 338 companies, reflecting their performance, investment plans, and views on the regulatory and operational environment in China.

Main Points

1. Business Performance in 2020

• Profitability: Despite the initial impact of the pandemic, 77.1% of companies reported profits in 2020, similar to previous years but higher than expected.
• Industry Variations:
  • Chemicals and non-consumer electronics: 100% profitable.
  • Pharmaceuticals, medical devices and life sciences: 87% profitable, 13% broke even.
  • Logistics, transportation, warehousing and distribution: 25% lost money, a significant drop from 2019.
  • Real estate, engineering and construction services: 30.8% reported losses.
• Margins: 21.5% of companies saw margins increase by 11% or more, while 30.2% reported lower margins.

2. Revenue Growth in 2020

• Global Revenue Growth: 49.7% of companies reported higher revenue in 2020 compared to 2019, better than expected.
• China Outperformance: 69.7% of companies expected China-based revenue growth to outperform their global growth over the next 3-5 years.

3. Business Forecast and Investment Trends

• 2021 Revenue Growth: 82.2% of companies projected higher revenues in 2021 than in 2020, signaling a return to pre-trade war growth levels.
• Investment Rebound: 59.5% of companies reported increased investment in 2021, up 30.9 percentage points from 2020, nearing 2018 levels.
• Reasons for Investment Increase:
  • Growth potential of the China market (81.7%).
  • Skilled talent pool (25%).
  • Efficient and cost-effective supply chains (21.4%).

4. Investment Priorities

• Top Investment Priority: China remains a top priority for many companies, with 26.9% listing it as their top investment destination.
• Sector-wise Priorities:
  • Retail and consumer: 42.5% ranked China as their number one global investment priority.
  • Pharmaceuticals, medical devices and life sciences: 30.4% called China their top investment choice.
  • Sales, marketing, and development: 58.3% of companies prioritized this area.
  • Research and development: 41.1% of companies cited this as a key investment focus.
  • Automation and productivity development: 58.6% of industrial manufacturers prioritized this.

5. Production and Offshoring

• Production in China: 72% of manufacturers had no plans to move production out of China in the next three years.
• No Relocation to the US: No companies were relocating production from China to the US.
• NEV Market Growth: The new energy vehicle (NEV) market is expected to become a major segment for companies.

6. Talent and Mobility

• Retaining Local Talent: 54.9% of companies found local compensation attractive, and 59.6% noted that Chinese workers preferred local firms for career advancement.
• US-China Tensions: 26.3% of companies cited US-China tensions as a negative impact on talent retention.
• Mobility Challenges: 53.4% of companies reported that travel restrictions affected their ability to attract and retain foreign talent, while 45.1% said they were impacted operationally.

7. Regulatory Environment

• Transparency: 46.7% of companies described the regulatory environment as transparent, down from 51.4% in 2020.
• Regulatory Impact: 34.3% of companies noted that while the regulatory environment was not transparent, it did not hinder business.

8. US-China Trade Policy and Tensions

• Trade Policy Uncertainty: 47.1% of companies cited uncertainty over US-China trade policy as a reason for reduced investment in 2021.
• Trade War Impact: Five-year optimism levels rebounded to pre-trade war levels, with 77.9% of companies optimistic or slightly optimistic.
• Decoupling Concerns: Despite the US administration's more measured approach, the risk of significant technological decoupling remains.

9. Digital Technology Investment

• Growth in Digital Investment: 69.8% of companies increased investment in digital technologies since the pandemic, up from 56.1% in 2020.
• Key Digital Areas:
  • Virtual working: 55.7% of companies upgraded technology for this.
  • Digital marketing: 51.7% implemented technologies for this.
  • Supply and demand management: 45.4% of companies increased investment in this area.
  • Customer relationship management and sales automation: 44.3% of companies increased investment.

10. China-to-Headquarters Connectivity

• China as a Strategic Hub: China operations are seen as beneficial to US headquarters and jobs, though the percentage of companies viewing China as a significant profit source dropped slightly.

Key Information

• Survey Conducted: June 15–July 15, 2021, with 338 responses.
• Main Topics Covered: Business performance, investment trends, ESG priorities, production restructuring, talent mobility, regulatory environment, and digital transformation.
• Collaborators: PwC provided support and data for the survey.
• Report Authors: Iris Fu, Kate Magill, Ian Driscoll.
• Contributors: Jessie Niu, Jason Wang, Qinly Wu, Lexi Qiu.
• Survey Partners: Jeff Yuan, Annie Han, Alexander Pearlman, Jan Nicholas, Serena Shi.
• Designer: Mickey Zhou at Snap Printing.

Conclusion

Despite ongoing US-China tensions and the challenges posed by the pandemic, American companies remain optimistic about the China market. They are increasing investments and focusing on growth, innovation, and digital transformation. However, concerns about regulatory transparency, talent retention, and trade policy uncertainty persist. The report underscores the importance of China in the global strategy of US MNCs and highlights the need for a more favorable business environment.