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Most US firms in China not to shift production back home: Survey

Bloomberg September 9 | Updated on September 15, 2020

US President Donald Trump   -  REUTERS

US President Trump has been asking companies to leave China and return home

President Donald Trump says US companies should leave China and return home. A new survey of US businesses in the country shows most aren’t interested in taking him up on the offer.

Only about 4 per cent of the more than 200 manufacturers surveyed by the American Chamber of Commerce in Shanghai said they will shift any production to the US, according to a report released on Wednesday. More than 75 per cent said they don’t intend to move production out of China, while 14 per cent said they will shift some operations to other countries and 7 per cent planned on relocating domestically and overseas.

South-east Asia is the most common destination, said AmCham Shanghai President Ker Gibbs in an interview. “Definitely not the US”.

Many respondents were more pessimistic about the state of US-China relations, with 26.9 per cent saying trade tensions would last indefinitely, up from 16.9 per cent last year. Another 22.5 per cent expected tensions to last between three to five years, up from 12.7 per cent in 2019.

Trump renewed his threat to US companies on Monday. “We’ll impose tariffs on companies that desert America to create jobs in China and other countries,” Trump said.

Trade tension

Decoupling between China and the US — ending the flow of trade and technology that boosts growth potential — would lower China’s GDP expansion to 3.5 per cent in 2030, down from a forecast of 4.5 per cent if relations remain broadly unchanged.

The Trump administration has targeted Chinese companies such as Huawei Technologies Co, and in August Trump signed an executive order announcing restrictions on WeChat, the popular app owned by Shenzhen-based Tencent Holdings Ltd that many Chinese consumers and businesses use for cashless payments.

Trump’s order is due to go into effect September 20 when the US Commerce Department is likely to announce the scope of the curbs. AmCham Shanghai members are worried a broad application of the order may prohibit them from taking payments via WeChat in China, said Gibbs.

That could drive Chinese customers to non-American rivals, he said. “Twitter, TikTok, those things are toys,” he said. “WeChat is deeply ingrained in the business ecosystem.”

Businesses are hopeful the Commerce Department will apply the restrictions in the US and allow companies to use it in China, said Gibbs. For now, though, there’s no clarity. “We are still very concerned,” he said.

The Trump administration is debating the scope and effective date of its bans on WeChat and TikTok and will make its decisions public later this month, Bloomberg reported last week, citing people familiar with the matter.

Published on September 09, 2020

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