Overall, AmCham China member companies in the Automotive & Transportation Vehicles industry are significantly more pessimistic about the current business climate in China than foreign business in other sectors. Half of respondents in the industry forecasted their 2015 earnings before interest and tax (EBIT) margins as lower than their 2014 EBIT margins. Rising labor costs and inconsistent or unclear laws and regulations remain the top two business challenges. The Automotive & Transportation Vehicles industry, along with Retail & Distribution, are the few industries with strong challenges from RMB volatility. Nevertheless, foreign companies remain optimistic in some regards. Seventy percent of industry respondents report profitable or very profitable financial performance in China in 2015 while no respondents reported any loss. Survey respondents view technology and intellectual and their unique branding as areas in which they enjoy significant competitive advantages over domestic Chinese competitors. Almost two-thirds have established a research and development center in China to encourage innovation.
Key Points of this Report:
- Only 15 percent of industry respondents describe their two-year business outlook in China as optimistic.
- The primary business objective for 85 percent of automotive and technology services companies is to grow their core business (e.g. with current products, services, customer segments).
- 50 percent of survey respondents cite rising labor costs as the most important reason for moving capacity outside of China.
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This report distills industry-specific data from the full 2016 BCS Report, reflecting the business climate for this specific industry.
To read more about how Automotive companies do business in China, visit the AmCham China Business Center.