Foreign companies optimistic about Chinese market in 2024: report

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This aerial photo taken on June 10, 2023 shows the night view of the urban areas in Guangzhou, south China's Guangdong Province. (Xinhua/Liu Dawei)

GUANGZHOU, Feb. 28 (Xinhua) -- The majority of 183 companies studied are optimistic about the growth of the Chinese market, according to a report released by the American Chamber of Commerce in South China (AmCham South China) on Tuesday.

Of these companies, 76 percent plan to reinvest in China in 2024. For those who have plans for reinvestment in China in 2024, 45 percent state that their primary area of investment focuses on sales, marketing and business development. Other key areas include research and development, automation and productivity development, according to the report.

The annual special report on the state of business in south China is regarded as an important window into China's business environment. This year marks the 20th release of the report by AmCham South China.

The enterprises studied by the report come from the United States, China, the European Union and other countries and regions, of which wholly foreign-owned enterprises account for more than half. American companies represent nearly half of the businesses studied.

Eighty-six percent of the companies studied claim that they will not decouple from the Chinese market due to the trade tensions between China and the United States. In 2023, 62 percent of the companies studied chose not to shift their investments out of China. Sixty-six percent of American companies claim that they will remain committed to the Chinese market, representing the highest proportion of all businesses studied.

Potential growth of the Chinese market is the primary driver for increasing investments in China or shifting investments from other markets to China, followed by industrial cluster effect and preferential policies, said Harley Seyedin, president of AmCham South China.

Over half of the companies studied believe that their overall return on investment (ROI) in China is better, compared with their overall return on global investment. Eighty-eight percent of the companies studied have already made profits in China, among which 46 percent reported to have met their budget expectations. Moreover, 90 percent of American companies have achieved profitability in China, according to the report.

Fifty-seven percent of the studied foreign companies consider China one of their top three investment locations, an increase of 5 percent from 2022. Guangzhou, the capital city of Guangdong Province and known as south China's manufacturing hub, has maintained its status as the top investment destination in the country 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 percent to 75 percent. Over half of the companies studied see an improvement in the business environment in south China, an uptick of 5 percent compared with 2022, said the report.