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The American Chamber of Commerce in Shanghai just released the results of an annual poll and the results were not good. American companies in China are struggling and optimism about the future of the Chinese economy has dropped to a record low.
Out of 306 companies polled, a record-low 66% were profitable in 2023, according to the China business report published by the American Chamber of Commerce in Shanghai.
The report also found that only 47% of respondents were optimistic about their business outlook in China over the next five years, the lowest in the survey’s history of more than two decades.
“It’s a balance between risk and reward,” said Eric Zheng, president of AmCham Shanghai, during a news conference ahead of the report’s publication.
“The perceived risks of doing business in China have gone up in the past few years, but at the same time the market is slowing down, with soft demand and overcapacity,” he said.
About 20% of respondents to the Chamber of Commerce survey said they would be cutting investments in China over the coming year. Some US companies have already started.
Shanghai’s economic-planning agency said last month that the decline in foreign investment in Shanghai was partly because of multinational companies such as suppliers to Apple shifting production capacity out, according to The Paper, a news outlet backed by the Shanghai government. Many Apple suppliers such as electronics assembler Quanta have production bases in the city.
Apple’s emphasis on sourcing from India and Vietnam grew after geopolitical tensions and pandemic-era lockdowns in China.
Apple is thinking ahead to what happens when Xi Jinping eventually launches an invasion of Taiwan, something he has guaranteed will happen if Taiwan refuses to submit to “peaceful reunification.” At that point, even assuming war with the US is avoided, US trade with China will probably cease. Apple needs to have a back-up plan in case it happens so it has been moving production and supply chains to Thailand, Vietnam and India.
