Survey: Challenges abound as companies seek growth in China U.S. companies operating in China are beginning to encounter obstacles to growth in the country, according to the results of a new study.

U.S. firms have increasingly targeted growth in China and elsewhere in the so-called BRIC economies, also comprised of Brazil, Russia and India. Though the U.S. and European economies were battered by the financial and housing crises that struck in 2007, a number of businesses were able to maintain – and in many cases, improve – profitability as a result of torrid demand in China.

However, it seems the opportunities for business growth in China have fallen over the past year, according to the results of a survey conducted by the American Chamber of Commerce. U.S. companies had enjoyed several years of robust expansion in China, the result of the nation's burgeoning middle class and its increasing purchasing power. Still, economic conditions in China have shifted over the past year or so, affecting firms' ability to continually grow profits there, the poll determined.

The American Chamber of Commerce had conducted its survey for the past 14 years, and this year's iteration polled 390 firms operating in the world's second largest economy. Of those surveyed in the 2012 Business Climate Survey, a growing number cited rising costs and a weaker economic climate as some of the factors slowing revenue and profit growth this year.

While companies said challenges are mounting in China, a high number noted they remain confident they can drive earnings there in 2012. Of those polled, 66 percent said their goal is to produce goods or services for China this year. That figure represents an uptick from 2010, when only 58 percent of respondents affirmed such a priority. As growth has slowed in traditional markets such as Western Europe and the U.S., businesses have had to look outside of their old markets as they eyed future growth.

Moreover, a significant number of companies are enjoying solid earnings growth in China, according to the poll. Thirty-nine percent of respondents said their profit margins in China were higher than those in other regions around the world. More than 75 percent of those polled also asserted they expect revenues in 2012 to be higher than the year prior.

Nonetheless, survey authors noted companies are increasingly becoming less optimistic about future growth prospects in China. Many are eyeing cost reduction there, as inflation has risen at a rapid clip, the result of the nation's torrid pace of economic expansion over the past three decades. Firms have also emphasized supply chain management and spend management as they contend with a bureaucratic business environment.

The survey also found companies are most concerned about the lack of a clear regulatory framework in China. Poll respondents said the nation's unclear and inconsistent laws are some of the most substantial obstacles they have had to overcome, according to American Chamber of Commerce chairman Ted Dean.

"Our members view China as a critical long-term growth market, and over 80 percent of them plan to increase investment in their operations this year," he said. "However, China's increasingly advanced economy requires a more open, transparent and market-oriented regulatory regime. Promoting greater government transparency and more vibrant market competition would benefit Chinese as well as foreign companies."

Though businesses are increasingly encountering challenges in their pursuit of growth in China, 82 percent of poll respondents said they plan to increase investment in their operations in the country in 2012. Still, if China hopes to maintain its position as a growing world power, it will likely need to alter its regulatory course, as 79 percent of those surveyed said China's enforcement of intellectual property laws is ineffective.

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