The American Chamber of Commerce in the People’s Republic of China (AmCham China) is a nonprofit organization which represents U.S. companies and individuals doing business in China. AmCham China’s membership comprises more than 2,600 individuals from more than 1,200 companies.
For the past 14 years, AmCham China has been surveying its members. They recently released their 2012 results, featuring survey responses from 390 loyal AmCham China members.
So what are they saying that you should know?
First, as an aside, is it worth joining or relying on these types of groups? Yes and no.
Yes, if you want to hear some war stories over a beer or a game of golf, are lonely for some U.S. buddies, are the CEO of a large corporation, are a small company in need of some basic contact and legal information, are a small/medium-sized company that is in China as part of a supply chain arrangement, you need help getting U.S. visas for your Chinese staff, you like surveys and believe they can tell you the future, and/or, if you do not mind being glad-handed at meetings.
No, if you are new to China and need a lot of help, do not have the time or funds for the numerous meetings and social gatherings and/or are a small company with a China sales focus.
Why should you not necessarily rely on a U.S., or other foreign, chamber of commerce, if you are new to a country and looking for help? For the same reason deer have to be careful around a watering hole. Foreign chambers of commerce are the hunting grounds of predators looking to eat, so be warned.
If you need help, check with friends and friends of friends about whom they used, what they were good at and how much it costs. Then make a short list, interview, negotiate and sign definitive contracts that spell everything out and then hold as much money back as you can.
Do not get me wrong, there are terrific people involved in these organizations, and the staff can provide reams of basic information and suggestions. But most successful people are busy, and the staff may have stories and friends, but they generally lack experience.
So what do these surveys mean and why report on them?
Surveys are about how people feel, but how people feel affects business and so you are forced to use them. But, given that you’re dealing with feelings, do not expect the answers to be logical.
For example: in AmCham’s survey, when asked “In the last year, China enforcement of IPR (intellectual property rights) has been:” (three choices, (1) totally ineffective, (2) ineffective and (3) effective), 79 percent chose either “totally ineffective” or “ineffective”, up 9 points from 2011. Yet, in the next question; “If you have taken administrative action on an IPR infringement, how satisfied were you with the level of cooperation from the relevant Chinese officials?” 61 percent said they were “very” or “somewhat satisfied,” up 11 points from 2011. As a guide, a client never says they are somewhat satisfied unless they got 90 percent of what they wanted.
One wonders what the reaction would be in the United States to such a question. Maybe someone should survey Microsoft, Google, Sony, Apple, Motorola and the rest of the tech companies that are using our, and the world’s, court systems as their new sandbox.
Another example: the question “Do you feel that China is losing competitive advantages due to rising costs?” 89 percent of the respondents answered that China is losing its competitive advantage “to some degree” or “to a great degree,” due to rising costs, 11 points higher than in 2011. But, in another question: “How does China rank in your company’s near-term global investment plans?” while those listing China as their “number one priority” went down by 11 points, those listing it a “top three priority” went up 11 points, which meant no real change if you took the positive answers.
One explanation may be, while China is losing its competitive cost advantages, it seems to have picked up other charms. In answer to the question: “What are your company’s primary goals and strategies in China?” those listing “produce or source goods and services in China for the China market” went up to 66 percent, up 5 points on 2011. Interestingly, those who listed “producing or sourcing goods or services in China for the U.S. market” was down 1 point from 2011 to 9 percent.
So what are American business people in China worried about?
First the list, in order, of the top concerns:
- Slower growth
- Higher labor costs
- Human resources
- IP issues
- National protectionism
- Contract enforcement
- Local protectionism
Second the list, in order, of the top dangers:
- China slowdown
- World slowdown
- Labor costs
- Labor shortages
- U.S.-China relations
- RMB Appreciation
One irony is becoming apparent: In the United States, qualified people can’t find jobs, and in China, they can’t find qualified people to fill them.