US Companies Face Stiff Competition in China

· China’s macroeconomy, a new option added to this year’s survey, emerged as the second biggest challenge companies are facing in the China market.

· US companies are losing market share as China pours support into domestic innovation programs, according to the survey.

· The survey was conducted between June and July of 2024 and draws from a pool of 140 member companies.

[ABS News Service/09.09.2024]

US companies doing business in China say that China’s economy is one of the biggest challenge they currently face, according to a new member survey from the US-China Business Council.

The survey found that while US firms’ performance in China remains strong, the country’s economic slowdown is weighing on optimism.

China’s macroeconomy, a new option added to this year’s survey, emerged as the second biggest challenge companies are facing in the China market. Weak domestic demand and overcapacity are the top constraints on companies’ increased profitability in China, in part due to price cutting. More companies than ever are pessimistic about the medium-term business outlook in China.

“This year’s survey points to a complex and ongoing challenging environment for US companies doing business in China, with geopolitics, overcapacity and lack of domestic demand in China dampening both profits and optimism,” USCBC President Craig Allen said.

US companies are losing market share as China pours support into domestic innovation programs, according to the survey. A record high proportion of companies have seen their market share in China decline this year, while a record low say their market share is growing. Intensified competition with domestic firms coincides with expanded industrial policy support, such as subsidies, for Chinese companies.

Geopolitical tensions continue to disrupt business relationships and inhibit market access for American companies in China. Ever-expanding US export controls, sanctions, and investment screenings are damaging and, at times, severing companies’ relationships with their Chinese customers, and China continues to erect barriers around its public procurement markets, inhibiting access for US firms. More companies are adjusting their China-specific business operations, strategies, and supply chains to mitigate the impact of increasing bilateral tensions.

The survey was conducted between June and July of 2024 and draws from a pool of 140 member companies.