Overall, AmCham China members companies in the chemicals industry are significantly less optimistic in their assessment of the business climate in China than foreign business in other sectors. Only about a quarter of industry respondents forecasted increasing revenue in their China operations in 2015 as compared to 2014 and the same percentage report positive EBIT (earnings before interest and tax) margins for 2015. Industry overcapacity and rising labor costs remain the top two business challenges. Specifically, the expectation of slower growth in China or the existence of faster-growing markets in other geographies and concerns about an uncertain policy environment hinder investment in China among industry respondents. Nevertheless, three-fourths of foreign companies in the chemicals industry are optimistic about domestic market growth for the next two years. Remarkably, not a single industry respondents plan to move capacity outside of China in the next three years. 75 percent of industry respondents state their primary business objectives will be to grow though acquisitions (JVs or other partnerships), and grow in core business (e.g. with current products, services, customer segments).
Key Points of this Report:
- Rising salary and wage expectation remains the top human resources challenge for chemicals industry respondents.
- 83 percent of respondents have established a R&D center in China.
- One-third of companies identify China’s investment environment as improving. Another third identify the investment environment in China as staying the same. And one-third report a deteriorating investment environment.
Download the full report (free for AmCham China members)
This report distills industry-specific data from the full 2016 BCS Report, reflecting the business climate for this specific industry.