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US firms thriving in China

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BEIJING, Feb. 17 -- American companies in China are prospering as they gain more access to domestic markets despite the ongoing trade frictions between the two countries, according to an American Chamber of Commerce (AmCham) survey released yesterday.

    China's increasing market growth and improved regulatory environment have contributed to more AmCham-member companies producing for the domestic market and trying to become wholly foreign-owned enterprises (WFOEs), said the report, which is based on seven years of annual AmCham polls in China.

    About 38 per cent of respondents in 2000 cited market access restrictions as a top-three barrier to profitability, while 66 per cent reported negative effects from business scope restrictions.

    However, from 2002 to 2005, two-thirds of the respondents were successful in expanding products and services offered in China.

    "Market access, while it still is a challenge, has become much easier," Teresa Woodland, co-chair of AmCham's public policy development committee, said at a news briefing to release the report.

    She said the issue had dropped off the list of the companies' top-10 challenges of doing business in China.

    Members were also increasingly more likely to have WFOEs, with 60 per cent reporting to have one in 2005, versus 33 per cent in 1999. Conversely, the percentage of AmCham members with joint ventures dropped to 27 per cent in 2005, versus 78 per cent six years prior.

    "That really exemplifies how things have changed here. Companies really do have a lot more options," Woodland said.

    According to the survey, companies in recent years have also been able to introduce more products and services to the Chinese market.

    About 83 per cent of respondents in 2005, versus 60 per cent in 1999, listed producing goods and services in China for the local market among their top three reasons for entering China.


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