Recent data released by the American Chamber of Commerce in Shanghai reveals a concerning trend for U.S. companies operating in China. In 2023, only 66% of American firms in China reported profitability, the lowest level in the survey’s 20-year history. Additionally, business confidence among respondents is at an all-time low, with only 47% feeling optimistic about their business outlook in China over the next five years.
The challenges faced by American companies in China are attributed to increased perceived risks of doing business in the country and a slowing market with soft demand and overcapacity. As a result, 25% of surveyed companies have decreased their investments in China, redirecting resources to other regions like Vietnam and Malaysia.
The strained relationship between the U.S. and China, along with economic challenges and geopolitical tensions, further compound the difficulties faced by foreign businesses in China. Both the American and European Chambers of Commerce are calling for policy reforms in China to restore investor confidence and stimulate economic growth, warning that without action, foreign investment in China may continue to decline.