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AmCham-China 2009 Business Climate Results

AmCham-China 2009 Business Climate Results. March 10 th , 2009. White Paper / Business Climate Survey. Annual Business Climate Survey – March 2009 The pulse of the American business community Extensive (45-60 minutes) survey Survey open mid-Nov/mid-Dec., 2008

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AmCham-China 2009 Business Climate Results

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  1. AmCham-China 2009 Business Climate Results March 10th, 2009

  2. White Paper / Business Climate Survey • Annual Business Climate Survey – March 2009 • The pulse of the American business community • Extensive (45-60 minutes) survey • Survey open mid-Nov/mid-Dec., 2008 • Follow-up survey for economic crisis • Update survey February 11-19, 2009 • White Paper – April 2009 • Over 100 policy recommendations • Targets US and China government • Bi-lingual, 40 chapters • 11th year

  3. Legal Registrations • WFOE preferred • JV when required • Still many rep offices • Growing complexity • More branches • Regional HQ • R&D centers • Holding company

  4. Small/Medium-Sized Enterprises

  5. Why China? • 63% in Chinafor Chinese market • Up from 51% last year • 17% for import to China • 5% for non-China, non-US markets • 9% in Chinafor US market

  6. China Operations Profitability • US companies are winning in China • Despite operating challenges • Longer time in China correlates to greater profitability

  7. Top 10 Business Challenges • HR issues at top • Government issues next • New challenges emerging

  8. Impact of HR Constraints

  9. Importance of IPR Protection • 65% view IPR protection as critically or very important to their business • IPR not important to only 10%

  10. Effectiveness of IPR Enforcement • Effectiveness of IPR enforcement still an issue • 72% see current IPR enforcement as ineffective

  11. Factors Influencing China Margins

  12. Global Investment Priority • 22% rank China #1 • Since 2004 as #1 • High of 51% (2007) • Low of 22% (2009) • Since 2004 in top 3 • Consistently narrow range of 75 – 78%

  13. Is China Losing Competitiveness? • Consistent concerns • Labor costs • Regulatory costs • Other input costs • Key question – what are other alternatives? • 2nd, 3rd tier cities

  14. Are Companies Planning to Relocate? • Clear answer • Importance of Chinaas a target market • Other strategic drivers • Good infrastructure • Extensive and integrated supply base • Human resources • Access to technology • Consistent growth

  15. Operation Changes

  16. Expansion to 2nd and 3rd Tier Cities • Significant number of members plan expansion to 2nd and 3rd tier cities • Modest decline from 2009 may reflect economic outlook

  17. Reasons for Expansion

  18. Revenue Expectations • Revenue growth expectations down • Drivers • Economic downturn • Uncertainty Data Source: February2009 Update Survey

  19. Human Resources – Workforce Changes • Equal share increasing and decreasing workforce • 28% increased • 25% decreased • Approx. half of companies report no change Data Source: February2009 Update Survey

  20. Human Resources – Looking Ahead • Both Expatriate and Total employees considered • More companies planning to increase overall workforce size Data Source: February2009 Update Survey

  21. Investment – Looking Ahead • 37% are postponing investment • Majority continuing to invest • 61% have no change • Only 2% of companies canceling projects Data Source: February2009 Update Survey

  22. Overall Business Confidence • Long term • Confidence remains high • 81% optimistic • Short term • Recognition of challenges • Rapid rebound Data Source: February2009 Update Survey

  23. AmCham-China This data & previous White Paper’s are available on our website: www.amchamchina.org For more information about AmCham-China see our site or contact us: • Phone: (86 10) 8519-0800 • Email:amcham@amchamchina.org

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