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American Businesses in China Report Drops in 2019 Revenue, Profitability

Joyce Huang

   Impacted by a slowing economy, American companies in China had a tough
   year last year with a record-high percentage of them reporting drops in
   revenue and profitability, according to the latest business climate
   survey by the American Chamber of Commerce (AmCham) in Beijing.

   The annual survey found that 21% of 372 surveyed American businesses
   especially those which produce in China for the Chinese market saw a
   drop in 2019 revenue -- the highest since 2015 and up from 12% and 7%
   respectively in 2018 and 2017.

   Some 61% of responding companies said they were profitable -- the
   lowest level in two decades and down from 69% and 73% respectively in
   2018 and 2017.

   The survey was conducted late last year and hence failed to reflect the
   impact from January's signing of the U.S.-China phase-one deal and the
   coronavirus outbreak.

   Bearish outlook

   At that time, 24% of respondents said they didn't expect market growth
   in 2020 while businesses in the manufacturing and energy sectors were
   even more pessimistic with 40% expressing a bearish outlook.

   "Even prior to COVID-19, our member companies were quite cautious about
   the market growth prospects due to the softening of the economy and, of
   course, that's going to be further accentuated by the COVID-19
   epidemic," chamber president Alan Beebe told a media briefing on
   Tuesday.

   The chamber's flash survey in mid-Feb already showed that nearly half
   of 169 surveyed executives expected 2020 revenue to drop if their
   business operation doesn't resume to normal by April.

   Almost one-fifth forecast a massive 50% drop or more in 2020 revenue
   shall the coronavirus outbreak ravage through August, although only 4%
   of respondents were considering relocation due to the outbreak.

   Major global economic institutes including IHS Market, the
   International Monetary Fund or the Economic Intelligence Unit have
   revised downward China's economic growth target by 0.4 to 0.5
   percentage points to the 5.5% level if the outbreak can be contained
   this quarter.

   Tough year ahead

   Expecting another tough year ahead, chamber chairman Greg Gilligan
   estimated that American firms, whose operation was disrupted by the
   virus outbreak, have resumed more than 50% or up to 80% of their
   productivity.

   The chamber plans on conducting another flash survey next week to
   update the business sentiment of its member companies, he said.

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