Confidence of American companies in China has been shaken, opportunity for India… considering shifting the plant

Political tensions, slow economic growth and fierce domestic competition are weakening the confidence of American companies to do business in China. A survey has claimed that this has led to a record drop in the outlook of American companies for doing business in China for the next 5 years. But India can get the biggest benefit from this decreasing confidence of American companies in China.

Only 47 percent of the US companies surveyed are now confident of doing business in China for the next 5 years. This is a drop of 5 percentage points compared to last year. The US Chamber of Commerce Shanghai conducted this survey, according to which this is the weakest outlook since the report began in 1999. Along with this, only 66 percent of the US companies present in China made profits in 2023, which is again a record decline. The reasons for the decrease in profit include domestic demand, inflation and geopolitical concerns.

Trade tensions escalate between China and America
According to Shanghai’s AmCham, this trend is affecting business plans. Due to this, US foreign investment in China fell by 14 percent to $163 billion in 2023. Geopolitical tensions remain the biggest challenge for American companies. Along with this, the dilemma regarding the relationship between the two has increased before the US presidential election. At the same time, the proposal to impose 100 percent duty on EVs made in China, 50 percent on semiconductors and solar cells and 25 percent on lithium-ion batteries has been postponed twice this year. China has appealed to the US to immediately remove all duties and threatened that in return it can also impose similar charges on American products.

40% companies will come to India!
In this survey, questions were also asked about the relations between America and China, in which 66 percent of the companies said that the relations between the two countries are the biggest challenge and 70 percent have considered China’s economic growth as the biggest challenge. At the same time, 35 percent of the companies have described China’s regulatory environment as transparent. But 60 percent have said that local companies should be given more preference.

The survey says that now 40 percent of American companies are shifting their investments from China to South-East Asia and India. According to Amcham’s report, like last year, this year also 40 percent of companies are planning to invest in other countries instead of China. The report of the European Chamber of Commerce also reveals that the challenges of doing business in China are taking a toll on profits.