On March 29, the American Chamber of Commerce in China (“AmCham China”) released its 15th annual Business Climate Survey. This year, AmCham China polled 325 of its members, most of which are U.S. companies operating in China. According to AmCham China’s Chairman, this year’s results reflect “expectations for growth” tempered with “a more conservative business outlook.” Fewer respondents cited China as a top-three global investment priority than last year, and almost half of respondents cited rising labor costs and Chinese economic slowdown as risks in China.
The Survey also reveals a growing sense that IP theft harms foreign companies operating in China. 34% of respondents stated that Chinese IPR infringement caused material damage to their China operations, a full 12-point increase from 2012. And although more than half of respondents are shifting to cloud computing, only 10% would consider using China-based cloud computing, predominantly due to concerns about data security.
Notably, 26% of the respondents stated that proprietary data or trade secrets from their China operations have been stolen. This last statistic has been widely reported in the international news media (see here, here, here, and here), reflecting growing concerns about cybersecurity in China (although during a verbal briefing on the Survey, AmCham China’s Chairman noted that the source of cyber attacks may be cross-border and difficult to trace). The Survey concluded that concerns over data security pose “a substantial obstacle for businesses in China, especially when considered alongside the concerns over IPR enforcement and de facto technology transfer requirements.”