China still remains 'bright spot' for US companies

Despite bleaker business prospects over the past year, US companies operating in China continue to see it as a "bright spot" in which to do business, according to the president of the American Chamber of Commerce in Shanghai.

Small and medium-sized United States firms are being encouraged to boost their exports by cashing in on China's increased domestic consumption, she added.

"It is fair to say there are challenges for our companies operating in the Chinese market. They can range from regulatory challenges to structural challenges," Brenda Lei Foster, president of the chamber, or Amcham Shanghai, told China Daily.

"The importance is that the Chinese market is really maturing, and with that maturation you have increased domestic competition and competition from other countries. US companies just need to be able to compete at a higher level, but I think they are still optimistic about their prospects in China."

A survey by the chamber this year showed that 80 percent of US companies in China reported revenue growth in 2011 over 2010, down from 87 percent in 2010 from 2009, while 51 percent of firms said their operating margins improved in 2011 from 2010, down from 66 percent in 2010 over 2009.

Amcham Shanghai, founded in 1915 and known as the "Voice of American Business" in China, is the largest and fastest growing American Chamber in the Asia-Pacific region.

A report by Amcham added: "Rising costs were rated the most significant business challenge in 2011, replacing human resource constraints for the first time since 2006. As a result, 91 percent of survey respondents said rising costs are causing China to lose some of its competitive advantages compared to other low-cost manufacturing countries."

Following action taken by the Obama administration to create jobs for US citizens, some US firms in China pulled out, including the power company AES Corp, which sold its businesses in China due to the higher cost of coal in a State-regulated industry.