Page 8 - 2017 White Paper
P. 8
7 White Paper on the Business Environment in China
President’s Message
This year’s publication of our White Paper on the respondents in our 2017 Study was: “Did your company
Business Environment in China, which incorporates shift any reinvestments to other markets?” Although
our Special Report on the State of Business in South China, 29.9% of respondents reported no shift, 13.3% of wholly
marks a watershed in the history of the American foreign-owned enterprises, 11.4% of joint ventures, and
Chamber of Commerce in South China producing 26.67% of representative offices of foreign enterprises,
this policy document. The goal of this White Paper has representing a substantial number of respondents,
always been to produce a research-driven, fact-based replied that in 2016, they had shifted some reinvestments
approach towards an objective, neutral and balanced to other Asian, ex-China destinations. What was surprising
assessment and rationale of policies which we believe were the Chinese companies’ replies; a significant
will positively contribute to the Chinese economy and percentage (17.6%) said that they had moved some
its foreign investment community. In attempting to do reinvestments overseas to other Asian destinations.
so, our methodology, which, as in past years, consists of
extracting and analyzing the opinions of an extensive The shift to overseas investment could simply indi-
representation of the Chinese economy’s stakeholders, cate a perception starting to prevail in the business
from the local and foreign media, professors and community, that China may no longer be a competitive
academic experts from China and overseas, has revealed place for investment. It is reasonable to conclude
a chasm, between local and foreign media organizations, that a factor in the overseas diversion of investment
in how reform progress in China is being perceived. is the availability of emerging, more attractive, more
competitive jurisdictions outside of China – and that
Perhaps it is fitting that in the title of the introduction China could already be losing its competitive edge.
to this year’s White Paper, we pose a question, what do
China’s economic reforms mean for all stakeholders The Study shows that in 2016 50% of multinationals
moving forward into the future? Do these reforms signify with existing operations in China cancelled their
an opportunity - the chance to dig in one’s heels, stand reinvestments of over US$250 million or more, while at
firm and reinvest for a bright, productive, successful the same time they doubled their reinvestments in the
future? Or adversity – acknowledge that it’s time to cut lower categories of less than US$250 million. Also for 2017
one’s losses and walk away? The answers we garnered, 50% fewer multinationals have budgeted reinvestments
culled from the results of this year’s Special Report on the in the US$250 million or more category than last year.
State of Business in South China, were quite illuminating. However, they have at the same time doubled their
2017 budgets in the reinvestment categories of less
South China, led by Guangdong Province, continues than US$250 million. This trend suggests that executives
to be the best location for foreign investment in China as on the ground in South China have a high level of
this study shows an overwhelming majority of companies confidence in the future of the South China market and
consider the current business environment in South China are investing amounts within their decision-making
to be “good” or “very good”. At the same time, a similar ability. Executives at corporate headquarters in the West,
majority proved to harbor positive sentiments towards however, appear to be deferring large investments which
the China market replying that they feel “optimistic” or require their sign-off. We predict that the cancellation of
“slightly optimistic” about the economy. larger reinvestments in 2016 and reduced reinvestment
budgets for 2017 will translate into reductions in China’s
What is particularly interesting is how both American exports in 2018 and 2019.
and Chinese businesses in China, as represented in our
annual Study, are reacting, in how they view reform The loss in investment is also attributable to two other
progress, and if they believe that China is still a top major factors, which we would like to highlight here,
investment priority. One of the new questions posed to because it is our opinion that if the Chinese authorities
8
President’s Message
This year’s publication of our White Paper on the respondents in our 2017 Study was: “Did your company
Business Environment in China, which incorporates shift any reinvestments to other markets?” Although
our Special Report on the State of Business in South China, 29.9% of respondents reported no shift, 13.3% of wholly
marks a watershed in the history of the American foreign-owned enterprises, 11.4% of joint ventures, and
Chamber of Commerce in South China producing 26.67% of representative offices of foreign enterprises,
this policy document. The goal of this White Paper has representing a substantial number of respondents,
always been to produce a research-driven, fact-based replied that in 2016, they had shifted some reinvestments
approach towards an objective, neutral and balanced to other Asian, ex-China destinations. What was surprising
assessment and rationale of policies which we believe were the Chinese companies’ replies; a significant
will positively contribute to the Chinese economy and percentage (17.6%) said that they had moved some
its foreign investment community. In attempting to do reinvestments overseas to other Asian destinations.
so, our methodology, which, as in past years, consists of
extracting and analyzing the opinions of an extensive The shift to overseas investment could simply indi-
representation of the Chinese economy’s stakeholders, cate a perception starting to prevail in the business
from the local and foreign media, professors and community, that China may no longer be a competitive
academic experts from China and overseas, has revealed place for investment. It is reasonable to conclude
a chasm, between local and foreign media organizations, that a factor in the overseas diversion of investment
in how reform progress in China is being perceived. is the availability of emerging, more attractive, more
competitive jurisdictions outside of China – and that
Perhaps it is fitting that in the title of the introduction China could already be losing its competitive edge.
to this year’s White Paper, we pose a question, what do
China’s economic reforms mean for all stakeholders The Study shows that in 2016 50% of multinationals
moving forward into the future? Do these reforms signify with existing operations in China cancelled their
an opportunity - the chance to dig in one’s heels, stand reinvestments of over US$250 million or more, while at
firm and reinvest for a bright, productive, successful the same time they doubled their reinvestments in the
future? Or adversity – acknowledge that it’s time to cut lower categories of less than US$250 million. Also for 2017
one’s losses and walk away? The answers we garnered, 50% fewer multinationals have budgeted reinvestments
culled from the results of this year’s Special Report on the in the US$250 million or more category than last year.
State of Business in South China, were quite illuminating. However, they have at the same time doubled their
2017 budgets in the reinvestment categories of less
South China, led by Guangdong Province, continues than US$250 million. This trend suggests that executives
to be the best location for foreign investment in China as on the ground in South China have a high level of
this study shows an overwhelming majority of companies confidence in the future of the South China market and
consider the current business environment in South China are investing amounts within their decision-making
to be “good” or “very good”. At the same time, a similar ability. Executives at corporate headquarters in the West,
majority proved to harbor positive sentiments towards however, appear to be deferring large investments which
the China market replying that they feel “optimistic” or require their sign-off. We predict that the cancellation of
“slightly optimistic” about the economy. larger reinvestments in 2016 and reduced reinvestment
budgets for 2017 will translate into reductions in China’s
What is particularly interesting is how both American exports in 2018 and 2019.
and Chinese businesses in China, as represented in our
annual Study, are reacting, in how they view reform The loss in investment is also attributable to two other
progress, and if they believe that China is still a top major factors, which we would like to highlight here,
investment priority. One of the new questions posed to because it is our opinion that if the Chinese authorities
8
