Overall, the Aerospace industry is significantly more optimistic in its assessment of the business climate in China than foreign business in other sectors. No industry respondents reported revenue losses for 2015 as compared to 2014 and none reported declining EBIT (earnings before interest and tax) margins for 2015. Foreign companies in the aerospace industry report their unique branding and regulatory management skills as significant competitive advantages over domestic Chinese competitors. No industry respondents plan to decrease or eliminate investment in their company’s China operations for 2016. Nevertheless, significant challenges remain including inconsistent or unclear laws and regulations and rising labor costs. Corruption, taxes and environmental degradation are reported as top business challenges for the first time in five years. 20 percent of industry respondents classify China’s investment environment as deteriorating, while 20 percent report that it is improving and 60 percent say it is staying the same.
Key Points of this Report:
- 86 percent of companies estimate they will increase their investment in China for 2016 modestly by 1-10%.
- Rising salary and wage expenses and difficulty attracting skilled executive or managerial staff remain the top human resources challenges.
- 22 percent of industry respondents have moved capacity outside of China in the past three years but none report that they plan to move capacity in the next three years.
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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 Aerospace companies do business in China, visit the AmCham China Business Center.