US to blame for China trade friction: Amcham
(Reuters/AFP)
Updated: 2005-09-13 16:38

But, in general, U.S. companies needed to make a greater effort to penetrate the vast market, he said.

"It's not so much getting China to open," he said. "But getting more (U.S.) manufacturers, investors and traders to get into the game here."

He said foreign companies in China are facing a future of slimmer profit margins as their number multiplies and competition gets fiercer.

"This place is getting more competitive. There's more foreign companies coming in, there's more Chinese companies getting stronger," he said.

A survey of AmCham member companies suggested that about 30 percent were seeing better profits in China than in the world as a whole, down from 40 percent in previous years, he said.

"(China) is acting more like a normal competitive market and we would expect that to continue to happen over the coming years," he said.

"You're going to get more competition, you're going to get pressure on the margins."

The tougher competition is coming about not just as more foreign enterprises enter China but also as new local competitors emerge, typically in service industries such as media and law, according to Martin.

"They say -- we can't do the offshore investment but we can do everything else you need done here at one half the price or one third the price," he said.

Hard data on profitability is usually difficult to come by in China, partly, observers said, because enterprises tend to understate the amount of money they make in order to avoid taxation.

But figures released earlier by AmCham showed that about 86 percent of members taking part in a survey said they posted higher revenues in 2004 compared to 2003.