Lower Revenue, Delays Hinder Return to Normal

Flash Survey 3 EN Cover.jpg

中文

  • Third monthly Flash Survey details progress on road to recovery for American companies in China.
  • Two-thirds now say COVID-19 will stall their industry’s 2020 market growth, with consumer sector hardest hit.

Beijing, April 29, 2020 – US firms in China say business is gradually returning to normal, but lower revenues and delayed payments are leading to changes in both short-term and long-term strategies. That is according to the results of a third Flash Survey release today by the American Chamber of Commerce in China (“AmCham China”) that evaluates the impact of the COVID-19 outbreak on its member companies. With close to 150 companies responding to the survey, these results provide a detailed insight into the ongoing impact on American companies in China, as well as detailing suggested policy responses for both the US and Chinese governments.

The impact on business operations continues to be widespread. 77% of surveyed members say they are experiencing global travel disruptions (up from 45% last month), while 44% cite business challenges stemming from policies preventing foreign staff from returning to China. Additionally, the percentage of companies encountering cash flow challenges and delayed payments has doubled from last month’s survey.

On the positive side, 42% of respondents say they have resumed normal operations, but the longer-term outlook for others remains gloomy. 76% of respondents (up 12 and 18 percentage points from the March and February surveys, respectively) predict revenue declines if business cannot return to normal before the end of August, and the share of those reporting a daily loss of between half and one million RMB has nearly doubled in a month, from 6% to 11%.

“To combat these ongoing challenges, many of our members are increasing investments in IT, with a focus on improving workforce productivity and their relationship with customers,” said AmCham China Chairman Greg Gilligan. “But they need additional help, and our survey results also point to specific areas where both governments could assist during these trying times. Nearly a quarter of respondents hope the US government will restore visa services – a 7 percentage point increase from last month – while tax alleviation remains the top area in which foreign companies are seeking support from the Chinese government, with others asking that senior expat executives can be allowed to return to China.”

67% of respondents say they expect the pandemic to stall their industry’s 2020 market growth, up from 58% last month; only 19% (down from 27% last month) still say it is too soon to determine the impact. Meanwhile, approximately 30% of respondents with over 1,000 employees say they will maintain previously planned investments; however, that share has dropped roughly 20 percentage points from last month.

The survey also found:

  • Half of respondents are revising annual budgets and/or cutting costs.
  • Only 19% say the pandemic is not impacting their long-term business strategy, down 14pp from last month; 13% report plans to delay or cancel future investments, a 5pp increase from last month.
  • Nearly one-fourth of respondents are having to reassess their 2020/2021 budgets originally allocated for China operations and one fifth are experiencing greater difficulty with their imports, due to the global spread of COVID-19.
  • 13% of companies in the Technology sector predict an increase in market growth and 9% expect no impact, though nearly one-third say it is too soon to tell; 33% of Consumer sector respondents expect their 2020 market forecast to decrease by at least 35%.

This flash survey was conducted between April 13 and 17, 2020, and 144 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. 

AmCham China members have been sent the full 31-page survey results featuring industry-specific data via email. If you are an AmCham China member and did not receive this email, contact Chloe Ma at cma@amchamchina.org.

For non-members, please email membership@amchamchina.org.