US Companies in China Say They're Losing Market Share in China
A survey of large American-headquartered multinationals -- 40% of which capture more than $1 billion in revenue from Chinese operations -- found as one of their top concerns the rising competitiveness of Chinese companies, whether from subsidization or business advances, or a combination of those factors.
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Of those surveyed by the U.S.-China Business Council, 22% said competition from Chinese companies made it harder to make money in China -- up from two years ago. And 34% of respondents say they are losing market share in China, while only 15% said they're gaining market share -- both record figures.
"Competition with Chinese companies ranked number three on the list of top 10 challenges this year, a concern fueled by lost market share in China and globally," the report said.
The majority still said their companies would be less competitive globally if they didn't operate in China, and many are reinvesting profits from Chinese operations in China, though few are growing investment there.
"The impacts of US-China tensions on supply chains are pronounced, with 43 percent of respondents reporting supplier or sourcing shifts," the report said. If they are shifting supply chains, Southeast Asia and India are the most common beneficiaries; 30% are choosing the U.S. or East Asia; 20% are choosing Mexico.
Tariffs are low in the top 10 concerns; Chinese nationalism influencing purchases by Chinese consumers was far higher. However, 20% said they lost sales because of U.S. tariffs.
The U.S.-China Business Council has always emphasized its members' interests in selling in China, but 32% of respondents say China is an export platform to serve markets other than the U.S., and 23% still say it's an export platform for U.S. sales.
The report said geopolitical tensions between the U.S. and China -- the No. 1 concern for its members -- will be elevated whether former President Donald Trump returns to office or Vice President Kamala Harris wins election. U.S. "restrictions toward China will likely continue to tighten for the foreseeable future -- it is just a matter of degree and scope."