China may be one of the world’s biggest markets, a country that is not lacking in potential, but it also is an increasingly difficult place to do business. At least that’s what the results of a new survey by the American Chamber of Commerce in China reveals.
In its latest annual overview, the U.S. business lobby found that as many as 81 percent of its members feel unwelcome. Companies doing business say that it is not just the rising cost of doing business in China, but inconsistent and unclear regulations as well as increasing Chinese protectionism that is fueling that pessimism.
“There are policies here that really make it more and more difficult to do business,” says AmCham China Chairman William Zarit.
A playing field that is tilted in the favor of Chinese companies is also a persistent concern.
Zarit says that while the phrase ‘indigenous innovation’ has kind of gone away, “the sense of building Chinese champions at the expense of sometimes American companies being able to do their business here…I think that also adds to this feeling of not being welcome.”
That feeling of being unwelcome as well as a slowdown in the Chinese economy is sapping investment interest in China and more companies are deprioritizing the world’s second largest economy as an investment destination.
From 2012 until now, the percentage of companies that identify China as one of their top three global investment destinations has slipped from a peak of 78 percent to 56 percent, according to the survey.
But clearly, given its potential, few have written China off entirely. The survey found that if Beijing were to remove “discriminatory barriers” to foreign investment companies and investment restrictions, members of the business group say they would “significantly increase investment.”
However, few are optimistic that will happen anytime soon, according to the survey.
China has been talking about moving forward with reforms for years now, but many, Chinese and foreign critics alike, see those efforts as stalled.
Tuesday, Chinese President Xi Jinping talked up open markets and warned against protectionism. China also revealed new proposals to reduce restrictions on investment that same day.
Just how much an impact the incoming administration of president-elect Donald Trump will have is unclear. Trump has been a harsh critic of China’s trade practices and has pledged to get tough on Beijing.
Zarit says members of the trade lobby are very concerned about the year ahead and will be doing everything they can to make sure the U.S.-China commercial relationship stays beneficial to both China and especially the U.S.
“It makes sense that the U.S. policy makers want to be a little more forthcoming and in some cases a lot more forthcoming and perhaps firmer on negotiating with the Chinese on economic issues because we feel that over the last few years that we’ve been taken advantage of to some extent, with our open market and the lack of open areas in the Chinese market,” Zarit says.
“We just want to make sure that we don’t get into a situation, like you say a trade war, or something like it, where both sides will lose.”
Next month, Zarit and a handful of others, including former chairs of the AmCham China will visit Washington DC in an effort to reach out to the incoming administration.
"We certainly are not going there to lecture the administration, but we are there to share our ideas on a win-win path forward, a more constructive path forward, and also to hear what they have to say," he says.