American companies are less optimistic about the potential for growth in China, especially if they are focused on exporting to the home market, according to a new report by PwC for the American Chamber of Commerce in Shanghai. As a result, investment is slowing.
Tariffs and China’s slowing economy are the primary concerns, with more than 50 percent of member companies saying they are either delaying or reducing investment because of the U.S.-China trade tensions. Only 47 percent of companies say they plan to increase China investment this year compared to 61 percent in 2018, with many manufacturers reporting they are relocating to production sites in other countries.
Other challenges include rising costs, local competition, onerous regulatory requirements, and limited protection against intellectual property theft. Nonetheless, about three-quarters of companies reported profits for their Chinese business.