- More than two-thirds report decreased revenue projections for 2022
- Supply chain and production challenges ease, but close to half of respondents say investment has been cut or postponed
Beijing, June 30, 2022 – US companies in China continue to experience a range of negative impacts from pandemic-related restrictions, according to a new Flash Survey from the American Chamber of Commerce in China (“AmCham China”). 98% of respondents reported an ongoing negative impact from COVID-19 on their business, citing a range of factors, despite the announced end of lockdowns in Shanghai and elsewhere. Meanwhile, revenue projections have worsened in recent months, with 69% of respondents reporting their 2022 revenue projections have decreased, an increase of 11 percentage points (pp) from a previous survey conducted in May (“May Survey”).
Small improvements were seen when it comes to investment and production. While 44% of respondents say they have either decreased or delayed investment as a result of the recent COVID-19 outbreak, that figure is down from 52% in the May Survey. Across all regions, 46% of respondents report slowed or reduced production capabilities due to a lack of employees, inability to get supplies, or government-ordered lockdowns, down from 59% in the May Survey. Three percent of respondents say their operations remain completely closed at this stage.
14% of respondents say foreign talent is refusing to relocate to China and/or making and acting on plans to permanently exit China, up slightly (2pp) from the May Survey. Among the 80% of respondents who employ foreign staff, 10% said the current COVID-19 restrictions have resulted in a reduction of over 30% of their foreign staff. Meanwhile, just 39% of respondents say they are satisfied with China’s effective contact tracing efforts, with members increasingly dissatisfied with China’s pandemic-related restrictions: 79% cited restrictions on travel to China as something with which they were dissatisfied (up from 77% in the May Survey), while 73% cited confusing and conflicting regulations during lockdowns and testing (up from 65%).
Quote from AmCham China Chairman Colm Rafferty:
“This week’s announcement that quarantine for all inbound passengers will be shortened is a step in the right direction and one of many issues on which we have advocated,” said AmCham China Chairman Colm Rafferty. “77% of respondents to our most recent survey say the primary reasons for foreign employees choosing to exit or refusing to relocate to China is due to uncertainty around the length of quarantine and lockdowns. The government has made it clear that this recent improvement should not be misinterpreted as a sign of reopening and is based on the shorter incubation period of the Omicron variant. As always, consistent implementation is key when it comes to policy announcements, and our member companies are finding that to be very challenging. To provide just one example, five staff in our AmCham China Beijing office were recently identified as having the same level of risk exposure. However, each of the five staff received different directives from their local neighborhood committees, ranging from an additional COVID test to ten days of home quarantine. That is a huge difference for any company to manage and it is why member companies continue to request a higher degree of predictability and consistency with policy enforcement.”
“Additionally, as these survey results make clear, there remains a plethora of issues negatively impacting our member companies resulting from pandemic-related restrictions,” Rafferty continued. “We have noted and welcomed incremental improvements when it comes to visa policies and the length of quarantines, but the overall picture remains similar: it is still exorbitantly expensive to travel to China due in large part to the fact that flight capacity is still at a fraction of pre-pandemic levels. This affects not only foreign executives attempting to travel to China, but also many of the Chinese executives at our member companies who tell us that the inability to travel to their US headquarters is undermining their authority and negatively impacting their companies’ strategies for China investment decisions. As before, we urge the government to seek an even more optimal balance between pandemic prevention, economic development, and opening up of the country. We welcome the fact that government channels have been established to address the concerns of foreign businesses in China and we will continue to meet with government representatives at all levels to share those concerns and seek opportunities to work together towards a full recovery from the disruptions.”
Supply chain challenges saw some relief in the May Survey, though challenges remain. 45% of respondents to the survey mentioned disruptions to transportation and shipping networks as a top supply chain issue, down from 61% in May. Of those who report supply chain disruptions, logistical challenges remain the top concern, cited by 31%. For those with Shanghai operations, 22% report little-to-no progress in their business recovery, down 38pp from the May Survey (60%); 23% said their supply chain challenges had improved significantly, up 21pp from the previous survey.
Business recovery support policies from the Chinese government have been well communicated, but more than half say they do not go far enough. Among all respondents, only 9% were not aware of the policies released by both the central and local governments to support business recovery. However, 56% of the respondents say both the policies and their implementation are insufficient.
AmCham China conducted a Flash Survey of members on the impact of COVID-19 regulations on the American business community from June 22 to June 24. Some 102 companies with operations throughout China responded to the survey. This survey is a follow up assessment, based on the Flash Surveys released in April and May.
About AmCham China – US-China Business: The Next 100 Years
The American Chamber of Commerce in the People’s Republic of China (AmCham China) is a non-profit, non-governmental organization whose membership comprises tens of thousands of individuals from nearly 1,000 companies operating across China.
The Chamber’s nationwide mission is to help American companies succeed in China through advocacy, networking, insights, and business support services. AmCham China is officially registered as a foreign chamber of commerce in China and is licensed by China’s government to represent American business in mainland China. In addition to our headquarters in Beijing, AmCham China serves Tianjin, Central China, and Northeast China through our Chapters in Tianjin, Dalian, Shenyang, and Wuhan. Across the five offices, AmCham China has more than 30 Committees, and holds more than 150 events each year. Visit the Chamber’s website at www.amchamchina.org
For more information, please contact:
Mark Dreyer, Marketing & Communications Director, AmCham China
Iris Zhu, Public Relations Associate, AmCham China