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Press Release

For Immediate Release

Feb 27, 2024
For additional information, please contact:
Ms. Charlene Chen
Publication Manager
The American Chamber of Commerce in South China
Tel: 86-20-8335-1476 ext. 33
E-mail: cchen@amcham-southchina.org

Increases in Large Reinvestment Budgets by American Companies Observed Cautious Optimism Found in 2024 AmCham South China Study

GUANGZHOU, CHINA – February 27, 2024 – The American Chamber of Commerce in South China (AmCham South China) today released its 2024 Special Report on the State of Business in South China. The release was attended by over 200 government officials, business executives and members of media including over 40 foreign consulates mostly represented by their consuls general. This publication can be downloaded free of charge from the Chamber’s website at http://www.amcham-southchina.com/amcham/static/publications/specialreport.jsp

The 196-page bilingual 2024 Special Report on the State of the Business in South China, the 20th such endeavor, provides a comprehensive and quantitative analysis of the business community and valuable insights into the development trends in South China. This year, 183 companies participated in the study in total. This publication is researched and produced independently by AmCham South China and does not represent the opinions of the US or any other government or organization. AmCham South China does not receive any funds from any government in the production of this publication.

The Chinese economy in 2023 has beaten its growth target with GDP expanding at a rate of 5.2% and reaching a total of US$17.52 trillion. The country is expected to contribute around one third of global economic growth, remaining a crucial locomotive in promoting the world’s economy which has been well demonstrated in our previous study.

Dr. Harley Seyedin, Chairman and President of AmCham South China, winner of 2017 Oslo Business for Peace Award (together with Elon Musk, Durreen Shahnaz and Murad Al-Katib), which is awarded by an Award Committee of Nobel Laureates in Peace and Economics, said, “A study by Enright, Scott and Associates, shows foreign invested enterprises account for 33% of China’s GDP and 27% of its employment, while US companies contribute to China’s GDP each year more than 180 times the value of the usual measure of US FDI inflow.” Seyedin continued, “This explains the reason foreign enterprises, however cautiously, continue their interest in the Chinese market in spite of continued difficulties facing all companies due to impact of three years of Covid-19, interruptions in the supply chain, shipping container shortages, exorbitant cost of international travel and logistics, and anemic world demand.”

According to the 2024 Special Report on the State of Business in South China, of 76% of companies studied with plans for reinvestment in China in 2024, 77% plan to reinvest with a low quota (less than US$10 million). Only 3% will reinvest in projects involving US$250 million or more, indicating continued caution towards future investment in China. The proportion of American companies budgeting to reinvest US$250 million or more has increased to 4%. “Sales, marketing and business development remain the primary areas of reinvestment for our member companies. But at the same time, they are also paying attention to innovation and talent cultivation. This will strengthen corporate competitiveness and provide momentum for China’s transition from high-speed growth to high-quality development,” said Dr. Harley Seyedin.

Key Takeaways of the 2024 Special Report on the State of Business in South China:

26% of the companies studied gain over 60% of their global revenue from China, a drop of 14% from 2022.

88% of the companies studied have already made profits in China, among which 46% reported to have met their budget expectations. 90% of American companies have achieved profitability in China.

60% of the companies studied that have yet to make profits in China expect to achieve profitability within two years, while 15% believe that it will take over six years to reach that goal.

Generally speaking, companies studied believe that they enjoy a high rate of return on investment (ROI) in China. 80% of the participating companies report that their overall ROI in China is positive or very positive, a proportion far higher than the average positive ROI (74%) during three years of the pandemic (2020 to 2022). Compared with their overall return on global investment, over half of the companies studied (51%) believe that their overall ROI in China is better.

62% of the companies studied are optimistic about the prospect of the Chinese market, a drop of 4% from 2022, continuing the trend of decrease since the outbreak of COVID-19.

China is ranked the number one priority in the global investment plans by approximately two fifths of the companies studied (39%), down by 1% from 2022, continuing the trend of decrease in recent years.

66% of the companies studied actually reinvested in China in 2023, a decrease of 14% compared with 2022, indicating a slowdown in investment pace.

4% of the companies studied had each budgeted to reinvest US$250 million or more in China in 2023. Our study shows that precisely the same proportion of companies actually reinvested that amount in the same year.

In 2023, 62% of the companies studied chose not to shift their investments out of China. 66% of American companies claim that they will remain committed to the Chinese market, representing the highest proportion of all businesses studied.

Not a single company declared a complete withdrawal from the Chinese market.

76% of the companies studied plan to reinvest in China in 2024, a rise of 1% compared with 2022.

It is estimated that the companies studied have set aside US$10.95 billion from profits in China to reinvest over the next three to five years to expand and capture additional market share, a steep fall of 40.15% from 2022.

40% of the companies studied report that they are not planning to expand in China over the next three years, a rise of 9% from 2022 and the highest response rate on record. This demonstrates a further slowdown in business expansion by the participating companies.

Guangzhou has been ranked the most preferred investment destination in China for seven consecutive years, followed by Shenzhen, Shanghai, and Beijing.

The proportion of companies that consider the overall business environment in South China as "excellent" or "good" grew by 1% to 75%. 51% of the companies studied see an improvement in the business environment, an uptick of 5% compared with 2022.

Fierce local competition enters the top three challenges in this year’s findings as the biggest challenge faced by the companies studied in South China.

86% of the companies studied claim that they will not decouple from the Chinese market due to the US-China trade tensions.

44% of the companies studied are bullish about the bilateral relations in the coming year, up by 17% from 2022 and reaching a record high.

The confidence in US-China relations starts to rebound after an inverted V-shaped pattern between 2019 and 2022. 44% of the companies studied are bullish about the bilateral relations in the coming year, up by 17% from 2022 and reaching a record high. Dr. Seyedin said, “The positive dialogues between the world’s two largest economies, including the high-level summit meeting in San Francisco last November, have instilled renewed confidence in the business community and investors from US, China and across the globe. However, American companies have been and still are the hardest hit by both countries’ tariffs. It’s time for the two governments to resolve the pressing issues that matter the most to businesses from both sides, and revitalize the bilateral economic and trade relations.”

Special Report on the State of Business in South China

The Special Report on the State of Business in South China is a quantitative study of the business environment, conducted for consecutive years by AmCham South China. Each year, AmCham’s member and non-member companies participate in AmCham’s State of Business study, results of which will be garnered and edited into a separate publication.

The document can be downloaded free of charge from the chamber’s website at

http://www.amcham-southchina.com/amcham/static/publications/specialreport.jsp

About the American Chamber of Commerce in South China

The American Chamber of Commerce in South China (AmCham South China) is a non-partisan, non-profit organization dedicated to facilitating bilateral trade between the United States and the PeopleЁЏs Republic of China. Accredited in 1995 by the US Chamber of Commerce in Washington DC, AmCham South China represents more than 2,300 corporate and individual members, is governed by a fully-independent Board of Governors elected from its membership, and provides dynamic, on-the-ground support for American and international companies doing business in South China. Over the past ten years, AmCham South China has hosted on average each year more than 10,000 business executives and government leaders from around the world at its briefings, seminars, committee meetings and social gatherings. All AmChams in China are independently governed and represent member companies in their respective regions.

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