Pollution, unclear regulations major hurdles for US firms in China

Smoke is discharged from chimneys at a plant in Huai'an city, East China's Jiangsu province, Jan 31, 2015. [Photo/IC]

Chronic air pollution and unclear regulations are the major obstacles for most of the United States-based companies operating in China, a survey said on Wednesday.

Of the 477 companies that participated in the annual business climate survey conducted by the American Chamber of Commerce in China, 53 percent said that they experienced difficulties in hiring senior executives to work in China because of the country's chronic air pollution.

This is the first time that air pollution has been cited as a reason by most of the companies that have participated in the survey's 17-year history.

This year's report, conducted in partnership with Bain & Co, also said that 65 percent of the companies considered non-transparent, unclear and inconsistent regulations as the greatest barrier for their ability and willingness to invest in China.

James Zimmerman, chairman of AmCham China, said: "Member companies are committed to the market, but continue to weather a challenging business environment as China continues on a path of economic reform and sustainable development."

Regulatory concerns were highlighted as inconsistent and unclear regulations were found to be the second-biggest business challenge, after labor costs. About 57 percent of the respondents felt foreign firms were being targeted in investigations over pricing, anti-monopoly and anti-corruption probes by regulatory authorities.

"Our companies appreciate the complexities and difficulties that the Chinese leadership is confronted with as it balances its economy and implements its reforms," said Zimmerman. "Nevertheless, much work lies ahead for all of us this year and beyond as the Chinese economy continues to mature."

The more challenging business environment faced by US companies has resulted in the highest number since the 2009 recession, 31 percent, having no investment expansion plans in China for the coming year.