CGCC 2022 Annual Business Survey Report on Chinese Enterprises in the U.S.

Inspiring the path forward for Chinese businesses and investments in the U.S.

About the 2022 Business Survey

In its ninth consecutive year, the CGCC Annual Business Survey on Chinese Enterprises in the U.S. details the experiences and sentiments of Chinese companies in the U.S., based on responses from 111 companies and a select number of executive interviews. In a complex, changing, and increasingly contested environment, the business operations and investments of Chinese companies in the U.S. outlined a mixed picture of slightly recovered performances and mounting uncertainties bred by the tumultuous circumstances throughout 2021.

Survey Demographics

This year’s survey was conducted in March and April of 2022 and includes a total of 111 valid corporate responses. Respondents’ U.S. operations span a broad range of all 11 sectors in the Global Industry Classification Standard (GICS).

Respondents‘ sectors

In terms of their parent companies’ corporate ownership structure, almost half (48%) of the respondents are entirely privately-owned, and about one fifth (19%) are wholly government-owned.

2022 Key Trends

Company performances stabilize and slowly recover from disruptions since the pandemic.

Estimated performance results for 2021 show that revenue, profitability, and Earnings Before Interest and Taxes (EBIT) margins rebounded from the last two years, as Chinese companies took profitability improvement and business growth as primary objectives.

Year-on-year change of companies’ annual U.S. revenue change

Year-on-year change of companies’ estimated U.S. EBIT margin

Company satisfaction of the U.S. investment and business environment rebounded, but the results vary in sectors.

29% of respondents reported moderate or substantial improvement (6% in 2021 result). 24% of respondent companies made new investments in the U.S. in 2021. That number doubled results for 2020. Energy, materials, financials and IT companies indicated the highest level of satisfaction and expansion.

Year-on-year change of investment and business environment for the Chinese companies

Year-on-year change of new business investments in the U.S. by Chinese companies

While companies continue to be optimistic about their opportunities in the U.S., that optimism is in decline due to sustained trade disruptions, an increasingly uncertain regulatory environment, difficulty attracting and retaining talent, and a strained U.S.-China relationship.

About half of the companies (49%) forecast an increase of revenue over the next two years, and 27% of respondents (12% in 2021 results) expect more business investments will be made in 2022. However, companies’ U.S. operations face mounting pressure to sustain contributions to their global revenues and support from parent companies. 

Year-on-year company profit distribution from its U.S. operations

Year-on-year change of parent company‘s annual revenue is contribution by the U.S. company

Dimmed expectations of the future
U.S.-China relationship.

As U.S.-China relations grow complicated, the general hostilities and antipathy towards China force Chinese companies to be challenged on various fronts in this stalemate. Only 10% of respondents see bilateral relations improving in the upcoming year, the lowest since 2018. 19% of respondents (39% in 2021 result) foresee that the U.S.-China economic and trade relations will moderately or substantially improve in 2022. 

Year-on-year change of future expectations on U.S.-China
bilateral relations

Year-on-year change of future expectations on U.S.-China trade and economic relations

Featured Insights: Legal and Compliance

With expanding challenges and risks over the past years, Chinese companies’ compliance with U.S. law and regulations has begun to catch the attention of managers and policymakers in both countries. The 2022 survey includes the following key themes in the Legal and Compliance area:

About 80% of respondents have a general compliance policy, but some important, specific compliance programs are lacking at most firms. Only 52% of the companies have internal staff handling compliance matters.

Does your company have an in-house compliance committee to support compliance efforts?

U.S. regulators and companies’ Chinese headquarters play a crucial role in the design of the compliance programs, the role of in-house compliance directors should be elevated.

How did the following parties influence the design of the design of your U.S. compliance program?

Both the compliance staff and compliance budgets increased slightly in 2021.

How has the budget for compliance at your company changed over the past 12 months?

How has the compliance function staffing at your company changed over the past 12 months?

Complexity of U.S. laws and regulations and potential conflicts of rules between the U.S. and China are the top challenges for Chinese firms, reflecting the growing tensions between the two countries.

Top 5 challenges in complying with U.S. laws and regulations

Featured Insights: Brand and Trust

In the past few years, Chinese companies have experienced elevated resistance in entering and penetrating the U.S. market. Defining incidents including the trade war and COVID-19 outbreak boosted anti-China sentiments and resulted in a trust crisis affecting not only Chinese businesses but the larger Asian communities in the U.S. As Chinese companies continue to invest in elevating their brands as part of a continuation of their U.S. operations, the following trends emerged in the Brand and Trust area:

Chinese companies in the U.S. face critical challenges in brand and trust.

Main challenges in branding/marketing in the
U.S. market

Companies’ brand strategies are impacted by their evolving objectives, challenges, and the structures of their functional departments.

Whom do the following brand/marketing departments report to?

Companies are taking actions on societal issues to raise brand awareness and earn trust of the market, but the areas of focus are not entirely aligned with topics of concern to the U.S. public discourse.

What social issues do you think your company should take action on to best earn trust with stakeholders and build your company’s brand in the U.S.?

Chinese companies are being relatively conservative in adopting brand strategies to defend their traditional comparative advantages. This stresses the need for companies to invest in building resonating brands with compelling stories and intangible assets.

What new strategies have you adopted to build and enhance brand trust in the U.S.?

Executive Q&A

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