Nearly A Third Of U.S. Firms In China Facing Revenue Hits

Nearly A Third Of U.S. Firms In China Facing Revenue Hits

A survey of nearly 170 firms by the American Chamber of Commerce in China, or AmCham China, found nearly one-third of U.S. firms with exposure to China are facing increased costs and significantly reduced revenue due to the coronavirus outbreak.

Nearly half of U.S. companies in China said they expect revenue to decrease this year if business can’t return to normal before April 30, according to the survey conducted from February 17 to 20. Nearly one-fifth say their Chinese revenues for 2020 will drop by more than 50 percent if the epidemic persists through the end of August.

According to the survey, travel disruptions and reduced staff productivity present the most significant challenges for AmCham China member companies.

In terms of the economic outlook, nearly one-third of respondents expect a return to normal business operations by the end of March, while 12 percent project delays to extend through the summer. Meanwhile, more than half of respondents said it is too soon to determine the estimated cost of delays, though about 10 percent report they are losing at least half a million RMB per day.

“AmCham China member companies, like much of society here, face a large number of uncertainties in combating Covid-19,” said AmCham China Chairman Greg Gilligan. “There is, in the short term, a clear and significant negative impact to member company operations, through travel disruptions, reduced staff productivity, increased costs, significant drops in revenue, and more. However, for most of our members, it is still too early to tell how significant the long-term impact will be. 43 percent of respondents say it is too soon to determine Covid-19’s 2020 impact on market growth, half feel it is too early to determine the impact on still-planned investments, while one-quarter report plans to maintain existing investment plans.”

In other responses:

  • 44 percent said uncertainty around the epidemic has negatively impacted their outlook regarding the US-China bilateral relationship;
  • 49 percent of respondents hope the Chinese government will provide tax alleviation to help foreign business; additionally, more than one-third are seeking clear, consistent policies, while 35 percent ask that transparency be prioritized;
  • More than half of respondents hope the U.S. government will relax travel restrictions into the U.S., while a majority are seeking further information – both on implementation of the Phase 1 Trade Deal and Covid-19-related business policies; and
  • 80 percent of the companies said they have provided some form of assistance to China to fight the Covid-19 epidemic, and another 14 percent are planning to do so, with data collected so far showing that AmCham China member companies have contributed more than RMB 540 million ($77 million) in cash and in-kind donations.

This flash survey was conducted between February 17 and 20, 2020, and 169 member companies completed the majority of the questions. Survey respondents represent large, medium and small-sized enterprises, including many with global operations and some with operations in Hubei, China and/or provinces surrounding the center of the Covid-19 outbreak.