Health­care still seen as golden goose for Amer­i­can com­pa­nies

China Daily (Canada) - - FRONT PAGE - By YU RAN in Shang­hai yu­ran@chi­nadaily.com.cn

Amer­i­can health­care com­pa­nies are more con­fi­dent of pros­per­ing in China than any other in­dus­try from the US due to Bei­jing’s pol­icy pri­or­i­ties, China’s grow­ing mid­dle class and con­tin­ued ur­ban­iza­tion.

De­spite this level of op­ti­mism their five-year out­look has been tem­pered by the eco­nomic slow­down, ac­cord­ing to the 2015 China Busi­ness Re­port re­leased by the Amer­i­can Cham­ber of Com­merce in Shang­hai on March 4.

“Pop­u­la­tion growth and the emer­gence of a richer mid­dle class will en­large our mar­ket based on their in­creased de­mand for high-qual­ity med­i­cal treat­ments over the next five to 10 years,” said Shirley Zhao, pres­i­dent of Al­ler­gan. The US health­care gi­ant has been in China for over two decades.

The re­port is based on the re­sults of Am­Cham Shang­hai’s an­nual China Busi­ness Cli­mate Sur­vey, which has been re­flect­ing the views and in­sights of 377 Amer­i­can cor­po­rate ex­ec­u­tives for the last 16 years.

Nearly one-third of US com­pa­nies sur­veyed named China as their top global in­vest­ment pri­or­ity and 96 per­cent ei­ther main­tained or in­creased their in­vest­ment here last year.

Two-thirds fore­cast greater China in­vest­ments for 2015 while 28 per­cent plan to main­tain the sta­tus quo, leav­ing only a tiny frac­tion that ex­pects to tighten their cor­po­rate belts.

“Com­pe­ti­tion is be­com­ing more in­tense and China’s econ­omy is slow­ing down, but even at the cur­rent GDP growth rate China will con­tinue to of­fer many op­por­tu­ni­ties to Amer­i­can busi­nesses,” said Ken­neth Jar­rett, pres­i­dent of Am­Cham Shang­hai.

China saw strong for­eign in­vest­ment in­flows in the first two months in 2015, data re­leased by the Min­istry of Com­merce show.

The coun­try at­tracted $19.3 bil­lion, up 10.4 per­cent from the cor­re­spond­ing pe­riod in 2014. In­vest­ments from the US alone jumped 43 per­cent on-year.

“Com­pa­nies from in­dus­tries like health­care, IT, au­to­mo­biles and con­sumer goods are grow­ing rapidly with their ris­ing op­ti­mism in the China mar­ket,” Jar­rett said.

Like last year, ris­ing costs re­main their top chal­lenge. Over 90 per­cent put this as their big­gest headache in the re­port, with es­ca­lat­ing Chi­nese la­bor costs at the head of the list.

“Many for­eign com­pa­nies in China are start­ing to find them­selves stuck be­tween a slow­ing econ­omy and a stillchal­leng­ing com­mer­cial en­vi­ron­ment,” said Kent Kedl, man­ag­ing direc­tor for greater China at Con­trol Risks, which helped pro­duce the re­port.

The re­port showed that US com­pa­nies are in­creas­ingly con­cerned about the di­rec­tion of China’s eco­nomic re­form and its po­ten­tial im­pact on for­eign busi­nesses, par­tic­u­larly in ad­dress­ing long-stand­ing mar­ket ac­cess and reg­u­la­tory ob­sta­cles.

Mean­while, do­mes­tic com­pe­ti­tion from State-owned and pri­vate Chi­nese com­pa­nies con­tin­ues to im­pede the suc­cess of US com­pa­nies, with re­spon­dents cit­ing this among their three big con­cerns.

“To ob­tain suc­cess in China fac­ing fierce com­pe­ti­tion from lo­cal en­ter­prises, which no longer com­pete on price alone but with higher-qual­ity prod­ucts, we need to de­sign more in­no­va­tive items and of­fer bet­ter ser­vices for the China mar­ket to stand out,” said James Michael­son, a direc­tor of in­ter­na­tional fi­nance at Corn­ing.

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