China_Report_Issue_49_June_2017

problem. He said foreign-owned enterprises
are doing a better job when they operate in
China by hiring more local employees to save
costs, better promote the company image
and reputation.
“Hiring more locals will help to foster a
stronger relationship with the local market
which will contribute to learning and adapt-
ing to the local culture and policies,” he told
ChinaReport. “In addition to the complicated
political and legal environment overseas, cul-
tural conflicts have become a major challenge
for outbound Chinese companies. The good
news is that many companies have realised
the cultural differences and attached growing
importance to customer relations.”
Xu Chen, president of the Bank of China
USA and chairman of CGCC-USA, said cus-
tomer relations have exceeded price competi-
tion as the top priority of most Chinese com-
panies in the new CGCC survey. This shift
of business priority from pricing to customer
relationship reflects that Chinese companies
are moving along the product value chain,
turning from “basic manufacturing to more
high-tech and R&D-concentrated areas.”
According to the CGCC survey, 73 per-
cent of Chinese companies consider the US
market as one of their top three markets glob-
ally, and 94 percent said innovation is very
important to their business considerations
in the US. Approximately 30 percent of sur-
veyed companies have intensive R&D proj-
ects in the US.
“Chinese companies are increasing their
R&D spending in the US, and better respect-
ing intellectual property rights,” he said.

Tax Debates
The tariffs and corporate tax levied on
overseas investors have been an issue of con-
cern among Chinese companies over the
years since they ventured into the US mar-
ket heavily. According to the CGCC survey,
47 percent of Chinese companies considered
that levying high tariffs on Chinese imports
would pose additional challenges. Mean-
while, reducing corporate tax rates proposed
by the Trump Administration is viewed
favourably by Chinese investors. In April,

What is your perception on China-US

relations moving forward?

More concerned stay the same More optimistic

20%

60%

15%

If the US imposes a higher trade barrier on

Chinese imports, how would this influence

the business environment?

Bring more challenges stay the same Bring more opportunities

47% 50%

3%

How would Trump’s “Buy American, Hire

American” initiative influence your business

environment?

Bring more challenges stay the same Bring more opportunities

35%

55%

10%

How would you expect the degree of general

government oversight to change under the

Trump’s administration?

More relaxed Remain the same More tightened

2%

45%

53%

How would you expect the degree of govern-

ment oversight regarding Chinese M&A to

change under the Trump’s administration?

More relaxed Remain the same More tightened

4%

33%

63%

How would the change impact your

investment in the US?

Much reducedinvestment investmentReduced Remain the same investmentIncreased Much increasedinvestment

1% 7%

83%

0%

9%

Which potential item in Trump’s policy

agenda towards China is of the greatest

concern to your company? (Select all that

apply)

Foreign policies (south China sea, Taiwan)

Imposing high tax rates on imports from China

Immigration policies

Announcing China as a currency manipulator

53%

53%

46%

45%

Do you expect the immigration policy

agenda under Trump’s administration to

negatively affect your corporation’s com-

petitiveness?

no 39%

Yes 61%