AmCham China 2013
American Business in China
White Paper
www.amchamchina.org
About the White Paper
Represents the views of:
•Over 1,000 companies
•Over 3,500 individual members
Process:
•Working groups find consensus on key issues
•Volunteer members with expertise draft initial content
•AmCham China’s Policy Committee and staff edit and coordinate
•Approval by Board of Governors
About the White Paper
Chapter composition
•Business climate overview
•Industrial policy and market access
•Cross-sector issues
•Industry-specific issues
•Regional issues
Graphs/data that reflect member sentiment on business issues
•Drawn from Business Climate Survey, which polled 325 of our members
across a broad range of companies (released in March)
About Business Climate Survey Data
What it represents
• Our Business Climate Survey is not necessarily
representative of all foreign-funded firms in China
• We do believe that since approximately 30% of our
members responded (325 respondents), it is
representative of our membership
• Because we ask the same questions over a period of
years, our BCS allows us to track sentiment over time
Business Climate Survey Highlights
China was one of the top three investment priorities for a majority
of reporting American firms in 2012
•Revenue growth rates slower
•Profit margins still strong relative to other global markets
Human resource issues dominate list of business concerns
•Top five concerns include labor costs, inconsistent regulatory
interpretation and/or unclear laws, shortages of qualified
employees, shortages of qualified management, and corruption
Economic Evolution Underway
Signs of increasing maturity:
•Services play a larger role in China’s expanding urban areas
•World-class technologies are available and frequently used by a wide
range of state and private sector enterprises
•Household consumption is expected to grow rapidly in the coming years
New challenges:
•Low-cost labor, net export growth will no longer be the primary drivers
of growth
•Productivity must grow if China is to develop beyond middle-income
status
The Role of Foreign Firms
Foreign companies can offer:
•Productivity gains
•Managerial proficiency
•Technological expertise
Unfortunately, restrictions on foreign participation limit their ability to
contribute
Implicit or explicit support to state-owned enterprises (SOEs) also hinders
both domestic and foreign-owned private sector enterprises
Priority Recommendations
• Investment - streamline inbound foreign investment approval
processes by allowing “encouraged” investments to be filed for the
record without project and foreign investment approvals
• Standards - allow non-Chinese testing organizations to carry out
testing in China
• Transparency and Engagement - allow foreign-invested enterprise
(FIE) participation during the drafting of, and provide 60-day
comment periods for, all draft laws and regulations
• IPR - increase transparency and openness of IP legislative and
regulatory activity by allowing adequate opportunity and sufficient
time to provide comments
• Chamber appreciated invitation over past year to comment on draft
patent, copyright, and trademark legislation
How Foreign Firms Can Contribute
• Environmental quality
• FIE participation – many foreign companies have already
combated air, soil and water pollution problems aggressively over
the past several decades at home, through the adoption of
cleaner technologies, as well as monitoring and treatment of
emission sources
• Energy use
• Comprehensive oil and gas legislation making foreign
participation financially viable, including in shale oil and gas, can
help further reduce China’s reliance on coal as a primary energy
source
How Foreign Firms Can Contribute
• Food and product safety
• Strengthening China’s food safety regime, including through a
more unified set of science-based regulations, would help reduce
risks to final consumers
• Moving seed production and other restricted agricultural sectors
to the “encouraged” investment category would assist
agricultural modernization, helping China to reach international
productivity levels
How Foreign Firms Can Contribute
• Healthcare and elderly care
• Higher share of the population will be of retirement age, yet
traditional care-giving by family may not be sufficient
• A State Council initiative to make it easier for foreign firms to
invest in this area has not been implemented, creating
uncertainty and delaying foreign investment
How Foreign Firms Can Contribute
• Internet speed and security
• Faster, more efficient Internet access would help China
accomplish some of its own goals, including promoting
consumption, helping Chinese companies become internationally
competitive, and encouraging the growth of small business
• Online data security key to business confidence, strong
investment in R&D
• Innovative Internet and strong IP enforcement key to innovation
economy
• We encourage the adoption of international standards to
facilitate joint innovation between foreign and Chinese firms, as
well as full voting rights for foreign companies in standardssetting bodies, and the removal of equity caps on foreign
investment in areas such as telecom
Key Domestic Reforms
• Liberalizing financial markets
• Halt financial repression
• Support growth of domestic demand
• State-owned enterprise reform
• Private firms compete on an equal footing with the remaining
SOEs
• China’s marketplace would even more competitive
DC Outreach
• Conference on hot issues affecting US-China commercial relationship
• Meet with US Congress and Federal Agencies to discuss current
AmCham advocacy priorities
• AmCham’s President, Chairman, and members who bring a breadth
and depth of industry knowledge
• Distribute White Paper to every member of congress, distributes at
the conference, and hand delivers it to every meeting conducted
during the Outreach
DC Outreach
• USG Meetings:
• USPTO
• USDA
• Commerce
• EXIM
• USTR
• State – China Desk
• State – Office of Policy Planning
• USTDA
• DOE
• SEC
• Office of Vice President & National Security Staff