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In the 2021 Annual Business Survey Report on Chinese Enterprises in the US, released by the China General Chamber of Commerce – USA (CGCC) and CGCC Foundation, which was conducted with support from Ernst & Young LLP, despite the uncertainties, Chinese companies continue to view the US as an investment priority and remain firmly committed to the market in the long term.
In brief
- In its eighth consecutive year, the report details the experiences and sentiments of 183 Chinese companies in the US based on survey responses from the companies, as well as interviews with a number of select executives conducted in early 2021.
- According to the results of the survey, business operations and investments of Chinese companies in the US were severely challenged in 2020 due to pandemic-related disruptions and uncertainties in US-China relations.
- Despite the uncertainties, 65% of surveyed companies reported reinvesting profits in their US operations, a 15% increase from last year.
Xu Chen, Chairman of CGCC, President and CEO of Bank of China USA, commented, “While tensions in US-China relations in recent years, alongside the negative effects of COVID-19, have impacted our members’ views on the US business environment and affected their confidence, it is exciting to see the clear optimism and resilience of Chinese companies in this year’s survey. Our members have generally responded well to the pandemic’s dual role as an accelerator of transformation and amplifier of disruptive forces.”
The survey data show that significant variation was experienced by Chinese companies across sectors in the US during the last year. The most negatively affected were those in consumer-facing businesses and real estate, with the overall impact on many of those sectors viewed as severe. Some sectors, such as financial services, telecommunications and utilities were unaffected or only affected in a limited way. Across a small number of sectors, respondents reported some positive impact, especially in health care given its focus on fighting COVID-19.
Wenhua Huang, Vice Chairman of CGCC and President of SAIC USA Inc., said, “The spirit of mutual respect and cooperation is vital to China and the United States particularly amid the current environment, which is filled with the impact of the pandemic and international dynamics. Against this background, we firmly believe that the key data and findings of the survey would offer an opportunity for better understanding the state of Chinese investments in the United States. The valuable findings and quantitative analysis would benefit to informed business decision making.”
Download 2021 Annual Business Survey Report on Chinese Enterprises in the United States
Surveyed companies continued to invest in compliance last year, even with tougher economic conditions stemming from the pandemic. Compared to 2019 and 2020 survey results, respondents this year reported that strengthening the company’s systems and procedures superseded professional training and cooperation with third-party organizations as the key action to enhance regulatory compliance. Some companies mentioned that the top priority for the next 12 months is to continue strengthening corporate governance, building the risk and compliance culture, improving the enterprise risk management framework, and improving compliance operations and information security.
Shau Zhang, EY US Partner and Americas China Overseas Investment Network (COIN) Leader, added, “It’s clear from the survey that these companies are cautiously optimistic about the overall US business environment. In order to sustain growth in the US market, many of these organizations indicated they are prioritizing efforts to strengthen their compliance to navigate through the evolving legal and regulatory environment in the US, and continuing to support local communities in which they operate.”
Compared with previous years, surveyed companies expressed greater optimism about the direction of the bilateral relationship and economic cooperation going forward, in anticipation of a more predictable and stable US business environment. More businesses (39%) expect improvements than those (25%) expecting relations to deteriorate, compared with 33% and 30% in 2020 and 37% and 34% in 2019, respectively. Interviewed executives highlighted that their companies are actively monitoring bilateral relations and are seeking to play a role in building strong, positive relations – for example, through continuously investing in elevating their brands and raising awareness.
Jesse Lv, EY Greater China Global COIN Tax Leader, said: “We observe an active and lasting change among numerous surveyed Chinese companies in their brand building endeavors. These include the acceleration of digital investment and product innovation. A growing number of them are investing more on brand development and recognition to enhance the corporate image of the Chinese brands in the US.”
As businesses from both the US and China still hold deep commercial interests in investing in each other’s economies, CGCC remains committed to carrying out more constructive engagement and dialogues, building relationships, and achieving great synergies between US and Chinese businesses to encourage better understanding and cooperation on both sides.
Summary
The survey results shown in the report provide first-hand data on, and analysis of, key trends and the overall business sentiment of Chinese companies operating in the US market. Despite the uncertainties, Chinese companies continue to view the US as an investment priority and remain firmly committed to the market in the long term.