Pain Points: Travel Restrictions and Budget Cuts

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中文

  • Fourth monthly Flash Survey on business impact of COVID-19 also highlights HR hurdles as China settles into post-pandemic era.
  • One-fifth preparing for a 10-25% decrease in China revenue this year, with Consumer sector hardest hit.

Global travel disruptions remain the top concern for American companies in China, with 90% of respondents to AmCham China's new Flash Survey saying this has impacted their business operations, up from 77% last month. Meanwhile, both the short and long-term effects of the pandemic are now becoming clearer to companies, with 60% of respondents cutting costs (up 10pp from last month). 47% of respondents say they may adjust their long-term business plans (up 11pp from last month).

This month’s survey – the fourth monthly Flash Survey since COVID-19 first started to impact companies operating in China – also looked at the longer-term impact on HR departments. More than half of the respondents say they have been forced to implement hiring freezes, while almost as many report their companies are either planning to reduce employee compensation or have already done so.

Meanwhile, over one-third of respondents – rising to 53% in the Technology sector – are allowing managers to implement flexible work policies; just under one-third say they will not continue flexible work policies going forward. Nearly one-third of respondents say they are freezing or deferring internal promotions, while 28% of respondents say they will cancel or defer salary increases, and 18% say they will reduce or cancel bonuses in 2020.

“Four months into this pandemic, it is no surprise that companies are taking more decisive action as the business impact of COVID-19 becomes ever clearer,” said AmCham China Chairman Greg Gilligan. “While it is positive that some of the changes brought about by COVID-19, such as flexible work policies, will remain in place going forward, our member companies are sensibly re-evaluating their balance sheets in a quest to be as efficient as possible. However, many key factors lie out of their hands, with thousands of senior executives still stranded outside of China, and we will continue to work closely with the relevant government authorities in a bid to bring them back as soon as possible.”

AmCham China members are gaining increasing clarity on the financial impact of pandemic-related operational disruptions. 20% say they expect revenue from their mainland China operations to decrease by 10-25% if the pandemic extends through August 30. The Consumer sector could be particularly hard hit, with 21% of Consumer companies predicting China revenue to shrink by at least 50% this year.

This month’s results again show a wide split across sector lines when it comes to market growth. While 18% of respondents say they expect to see their China industry market growth decrease by 25-50% (up 10pp from last month), the tech sector remains bullish with 30% of Technology sector respondents saying they expect industry market growth in China to increase in 2020, up from 13% last month. Meanwhile, half of Consumer sector respondents expect industry market growth to decrease by more than 25%, up from 33% in April.

Requests for support from the US government remain consistent with last month’s results, with the restoration of regular visa processing services (23%) topping the list of actions that would help member companies. In terms of Chinese government support, survey respondents are most concerned about the return of senior expatriate executives (19%), while 16% want to see further tax alleviation policies.

The survey also found:

  • Consistent with last month’s results, 38% of respondents will maintain planned or increase existing investments; 37% plan to decrease investments, up 13pp from March.
  • 49% of respondents’ manufacturing facilities are operating at 100% normal capacity (up 14pp from last month).
  • 24% of respondents report an increased need for their China team to support global operations (up 10pp from last month).
  • 20% of respondents are planning to reduce payroll costs by implementing flexible labor policies; another 12% are considering doing so.
  • 59% of respondents report they have resumed normal operations, while another 17% (down 7pp from last month) do not expect normal operations to resume before the fall.
  • 85% of Consumer sector respondents report they have already resumed normal business operations; only 25% of Resources & Industrial sector respondents report the same.

This flash survey was conducted between May 19 and 23, 2020, and 109 member companies completed the majority of the questions. Survey respondents represent large, medium and small-sized enterprises, including many with global operations and some with operations in Hubei, China and/or provinces surrounding the center of the COVID-19 outbreak. These companies also represent a broad range of industries, categorized into four main sectors:  Technology & other R&D industries, Resources & Industrial, Consumer (product and services) and Services.

This report is available to AmCham China members only. If you are a member and did not receive a link to download the report via email, please contact Chloe Ma at cma@amchamchina.org.

To become a member of AmCham China and get free access to all our exclusive reports and more, please email the Membership team at membership@amchamchina.org

For media looking to access this report, please contact:

Mark Dreyer, Marketing & Communications Director, AmCham China

mdreyer@amchamchina.org