Latest news with #KyleSullivan
Yahoo
5 days ago
- Business
- Yahoo
Wall Street's China Exit? U.S. Firms Slash Investment Plans to 20-Year Low
Investor appetite for China is coolingand fast. According to the latest US-China Business Council survey, only 48% of U.S. firms plan to invest in China in 2025. That's a staggering drop from 80% just a year ago, and the lowest reading since the question was first asked in 2006. The reasons? Think tariffs, slower growth, and shifting industrial policy. While tensions between Beijing and Washington have eased slightly after recent talks in London, many firms remain in holding pattern mode. They are riding out the uncertainty, said Kyle Sullivan, VP of the Council's advisory services. And when you look under the hood, the sentiment shift makes sense: nearly one-third of companies say they've lost market share in China over the past three years, and almost 70% expect more of the same ahead. The push to diversify is gaining traction. A record 27% of companies said they've either moved or plan to move parts of their operations out of China. That's the highest since at least 2016. These aren't small playersover 40% of respondents earn more than $1 billion annually from their China business. Yet the mounting cost of retaliatory tariffs, particularly for firms sourcing inputs from the U.S., is proving difficult to absorb. About three-quarters of companies flagged tariffs as their top cost concern. Some are turning to alternative markets, while others are renegotiating with suppliers or passing higher costs down the chain. Each option comes with tradeoffs, and none offer clear-cut solutions. Meanwhile, China's policy landscape isn't helping. More than 80% of U.S. companies say Beijing's industrial policy is propping up once-uncompetitive Chinese firms, while nearly 60% believe it's steering customers toward local products. And although recent export approvals and a modest rebound in Chinese shipments to the U.S. offer a glimmer of stabilization, underlying trade friction remains. Tesla (NASDAQ:TSLA) and other U.S. multinationals with deep ties to China may have to navigate a tougher operating environment heading into 2025. Investors should watch how this plays outespecially with the political calendar heating up and policy decisions on both sides still in flux. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Times
6 days ago
- Business
- Business Times
Record US firms cut China investment plans as tariffs spiralled
[BEIJING] A record share of American firms froze investments in China as trade ties worsened earlier this year, a recent survey suggests. Fewer than half of the companies surveyed by the US-China Business Council (USCBC) between March and May said they planned to invest in China in 2025, a drop from 80 per cent last year and a record low since the group began asking a similar question in 2006, according to the Wednesday (Jul 16) report. While the annual survey was conducted before the easing of tensions following the countries' talks in London last month, the sharp fall in sentiment underscores the damaging effect of the trade war on investment in the world's second-largest economy. Companies are in a 'wait-and-see mode', Kyle Sullivan, vice-president of business advisory services at the USCBC, said in a briefing. 'They are riding out the uncertainty in trade policy.' The survey covers large, US-headquartered multinational companies, with over 40 per cent of respondents representing companies that generated at least US$1 billion in revenue in China last year. US companies have invested heavily in manufacturing in China over the last few decades, taking advantage of relatively cheap labour and the country's increasingly wealthy consumers. But rising trade barriers and China's growth slowdown have prompted companies to reassess their presence. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up While the country remains an appealing hub for manufacturing and innovation, 75 per cent of respondents cited China's retaliatory tariffs as their top cost concern, as they often rely on inputs from the US. A record 27 per cent of companies said they moved or planned to move some operations out of China, the highest since at least 2016. Beijing and Washington have seen relations thaw after both sides agreed to approve exports of crucial technologies, with Chinese exports to the US narrowing their drop in June. Still, shipments to the US fell 24 per cent in the second quarter compared to an increase of over 6 per cent for China's overall exports, according to official data. The survey also gave a sense of how US companies navigated tariffs. While the most common approach was sourcing from alternative markets, about one third of companies renegotiated prices with suppliers, while a similar share passed higher costs to downstream customers. Other key findings
Globe and Mail
6 days ago
- Business
- Globe and Mail
Daunted by geopolitics and trade war, US companies in China report record-low new investment plans
WASHINGTON (AP) — American companies in China are reporting record-low new investment plans for this year and declining confidence in their profitability, with uncertainty in U.S.-China relations and President Donald Trump's tariffs their top concerns, according to a survey released Wednesday. The companies are also challenged by China's slowing economy, where weak domestic demand and overcapacity in local industries are eroding profitability for the Americans. 'Businesses in China are less profitable now than they were years ago, but risks, including reputational risk, regulatory risk, and political risk, are increasing,' said Sean Stein, the president of the U.S.-China Business Council, a Washington-based group that represents American companies doing business in China, including major multinationals. The survey, conducted between March and May and drawing from 130 member companies, came as the two countries clash over tariffs and non-tariff measures, including export controls on critical products such as rare-earth magnets and advanced computer chips. Following high-level talks in Geneva and London, U.S. and Chinese officials agreed to pull back from sky-high tariffs and restrictions on exports, but uncertainty persists as the two sides are yet to hammer out a more permanent trade deal. Kyle Sullivan, vice president of business advisory services at the USCBC, said more than half of the companies in the survey indicated they do not have new investment plans in China 'at all' this year. "That's a record high,' Sullivan said, noting that it is ''a new development that we have not observed in previous surveys.' Around 40% of companies reported negative effects from U.S. export control measures, with many experiencing lost sales, severed customer relationships, and reputational damage from being unreliable suppliers, according to the survey. Citing national security, the U.S. government has banned exports to China of high-tech products, such as the most advanced chips, which could help boost China's military capabilities. Stein argued that export controls must be very carefully targeted, because businesses from Europe or Japan, or local businesses in China would immediately fill the void left by American companies. Silicon Valley chipmaker Nvidia won approval from the Trump administration to resume sales to China of its advanced H20 chips used to develop artificial intelligence, its CEO Jensen Huang announced on Monday, though the company's most powerful chips remain under U.S. export control rules. While 82% of U.S. companies reported profits in 2024, fewer than half are optimistic about the future in China, reflecting concerns over tariffs, deflation, and policy uncertainty, according to the survey. Also, a record high number of American businesses plan to relocate their business operations outside of China, Sullivan said, as 27% of the members indicated so, up from 19% the year before. In a departure from past surveys, concerns over China's regulatory environment, including risks of intellectual property misuse and lack of market access, didn't make it to the top five concerns this year. That's likely a first, and not for a good reason, Stein said. 'It is not because things got dramatically better on the Chinese side, but the new challenges, often coming from the U.S., are now posing as much of a challenge,' Stein said. Almost all the American companies said they cannot remain globally competitive without their Chinese operations. A survey from the European Union Chamber of Commerce in China in May found that European companies were cutting costs and scaling back investment plans in China as its economy slows and fierce competition drives down prices.
Yahoo
6 days ago
- Business
- Yahoo
Faced with geopolitics and trade war, US companies in China report record-low new investment plans
WASHINGTON (AP) — American companies in China are reporting record-low new investment plans for this year and declining confidence in profits, while uncertainty in U.S.-China relations and President Donald Trump's tariffs have become their top concerns, according to a business survey released Wednesday. The companies are also challenged by China's slowing economy, where weak domestic demand and overcapacity in local industries are eroding profitability for the Americans. 'Businesses in China are less profitable now than they were years ago, but risks, including reputational risk, regulatory risk, and political risk, are increasing,' said Sean Stein, the president of the U.S.-China Business Council, a Washington-based group that represents American companies doing business in China, including major multinationals. The survey, conducted between March and May and drawing from 130 member companies, came after the two countries clashed over tariffs and non-tariff measures, including export controls on critical products such as rare-earth magnets and advanced computer chips. Following high-level talks in Geneva and London, U.S. and Chinese officials agreed to pull back from sky-high tariffs and restrictions on exports, but uncertainty persists as the two sides are yet to hammer out a more permanent trade deal. Kyle Sullivan, vice president of business advisory services at the USCBC, said more than half of the companies in the survey indicated they do not have new investment plans in China 'at all' this year. "That's a record high,' Sullivan said, noting that it is ''a new development that we have not observed in previous surveys.' Around 40% of companies reported negative effects from U.S. export control measures, with many experiencing lost sales, severed customer relationships, and reputational damage from being unreliable suppliers, according to the survey. Citing national security, the U.S. government has banned exports to China of high-tech products, such as the most advanced chips, which could help boost China's military capabilities. Stein argued that export controls must be very carefully targeted, because businesses from Europe or Japan, or local businesses in China would immediately fill the void left by American companies. Silicon Valley chipmaker Nvidia won approval from the Trump administration to resume sales to China of its advanced H20 chips used to develop artificial intelligence, its CEO Jensen Huang announced on Monday, though the company's most powerful chips remain under U.S. export control rules. While 82% of U.S. companies reported profits in 2024, fewer than half are optimistic about the future in China, reflecting concerns over tariffs, deflation, and policy uncertainty, according to the survey. Also, a record high number of American businesses plan to relocate their business operations outside of China, Sullivan said, as 27% of the members indicated so, up from 19% the year before. In a departure from past surveys, concerns over China's regulatory environment, including risks of intellectual property misuse and lack of market access, didn't make it to the top five concerns this year. That's likely a first, and not for a good reason, Stein said. 'It is not because things got dramatically better on the Chinese side, but the new challenges, often coming from the U.S., are now posing as much of a challenge,' Stein said. Almost all the American companies said they cannot remain globally competitive without their Chinese operations. A survey from the European Union Chamber of Commerce in China in May found that European companies were cutting costs and scaling back investment plans in China as its economy slows and fierce competition drives down prices. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Independent
6 days ago
- Business
- The Independent
Faced with geopolitics and trade war, US companies in China report record-low new investment plans
American companies in China are reporting record-low new investment plans for this year and declining confidence in profits, while uncertainty in U.S.-China relations and President Donald Trump's tariffs have become their top concerns, according to a business survey released Wednesday. The companies are also challenged by China's slowing economy, where weak domestic demand and overcapacity in local industries are eroding profitability for the Americans. 'Businesses in China are less profitable now than they were years ago, but risks, including reputational risk, regulatory risk, and political risk, are increasing,' said Sean Stein, the president of the U.S.-China Business Council, a Washington-based group that represents American companies doing business in China, including major multinationals. The survey, conducted between March and May and drawing from 130 member companies, came after the two countries clashed over tariffs and non-tariff measures, including export controls on critical products such as rare-earth magnets and advanced computer chips. Following high-level talks in Geneva and London, U.S. and Chinese officials agreed to pull back from sky-high tariffs and restrictions on exports, but uncertainty persists as the two sides are yet to hammer out a more permanent trade deal. Kyle Sullivan, vice president of business advisory services at the USCBC, said more than half of the companies in the survey indicated they do not have new investment plans in China 'at all' this year. "That's a record high,' Sullivan said, noting that it is ''a new development that we have not observed in previous surveys.' Around 40% of companies reported negative effects from U.S. export control measures, with many experiencing lost sales, severed customer relationships, and reputational damage from being unreliable suppliers, according to the survey. Citing national security, the U.S. government has banned exports to China of high-tech products, such as the most advanced chips, which could help boost China's military capabilities. Stein argued that export controls must be very carefully targeted, because businesses from Europe or Japan, or local businesses in China would immediately fill the void left by American companies. Silicon Valley chipmaker Nvidia won approval from the Trump administration to resume sales to China of its advanced H20 chips used to develop artificial intelligence, its CEO Jensen Huang announced on Monday, though the company's most powerful chips remain under U.S. export control rules. While 82% of U.S. companies reported profits in 2024, fewer than half are optimistic about the future in China, reflecting concerns over tariffs, deflation, and policy uncertainty, according to the survey. Also, a record high number of American businesses plan to relocate their business operations outside of China, Sullivan said, as 27% of the members indicated so, up from 19% the year before. In a departure from past surveys, concerns over China's regulatory environment, including risks of intellectual property misuse and lack of market access, didn't make it to the top five concerns this year. That's likely a first, and not for a good reason, Stein said. 'It is not because things got dramatically better on the Chinese side, but the new challenges, often coming from the U.S., are now posing as much of a challenge,' Stein said. Almost all the American companies said they cannot remain globally competitive without their Chinese operations. A survey from the European Union Chamber of Commerce in China in May found that European companies were cutting costs and scaling back investment plans in China as its economy slows and fierce competition drives down prices.
