US firms in China look to services, survey shows

Buoyancy in the sector is backed by the increasing presence of small and medium-sized US enterprises, thanks to growing transparency in China and lingering economic struggles in the home market, the survey found.

Thirty-seven percent of companies identified themselves as small and medium-sized enterprises in 2013, or firms with 500 or fewer employees worldwide, up from about 25 percent a year ago.

The first wave of SMEs to settle in China arrived in early 2000, largely to adjust to demands by multinational corporations that invested in the country earlier, said Chris Wingo, founder of China Sage Consultants (Shanghai) Co. His firm helped SMEs from the United States to prepare and manage their businesses in China.

But as more SMEs became interested in China's growth, and the US economy remained lackluster, China has been on the radar for many smaller US firms since the late 2000s,Wingo added.

Robert Theleen, who chairs AmCham Shanghai and is chief executive officer of merchant bank China-Vest, which is based in the city, said that with China demonstrating its ongoing commitment to economic liberalization through initiatives like the Shanghai Free Trade Zone, it is only natural that more firms are setting up in the country.

"When you combine this improving infrastructure with the decades of experience that American businesses now have in this market, it's easier for US companies to profit from China's growth, regardless of their size," he said.

China has continued to act as a key profit center for US companies, with 74 percent of respondents reporting profits in 2013. Three out of four saw positive cash flows in their China operations, up by 3 percentage points from a year ago.

Eighty-six percent of the firms surveyed said they remain "optimistic or slightly optimistic" about forecasts for China's business prospects in the next five years.

But only 65 percent of the firms reported making additional investment in China, down from 74 percent the previous year.

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