Foreign companies in China see more profitable times ahead

Three out of ten multi-billion dollar companies that have undertaken foreign direct investment (FDI) into China say their returns are less than expected, in a poll by Fusion Consulting. Eight out of ten companies feel positive" or very positive" about the future prospects of FDI into China.

Eight out of ten multi-billion dollar companies that have undertaken foreign direct investment (FDI) into China reported that their investments are profitable, in a recent straw poll of ten companies undertaken by business intelligence consultancy Fusion Consulting.

However, three out of ten say their returns are less than expected, and four out of ten companies feel that returns in general for foreign companies in China are below expectations.

Only one reported higher than expected returns from its mainland investments.

The companies polled are industry leaders in a range of sectors including banking, business publishing and events, insurance, fine chemicals, industrial equipment, mobile phones, port operations, and semiconductors.

Human resources and government policies are rated the most important factors affecting the performance of foreign companies in China.

Importance of factors affecting foreign companies performance
(score out of 5)

• Government policies   4.4
• Human resources   4.3
• Organisation / management control   4.1
• Distribution / supply chain structure   3.6
• Marketing capabilities   3.3
• Copyright and counterfeit issues   3.1
• Transaction costs   3.0
• Payment settlement period   3.0

Source: Fusion Consulting

Issues that companies worry most about include developing their marketing capabilities, understanding customer behaviour, expanding distribution channels and cost control.

Looking to the future, eight out of ten companies feel positive" or very positive" about the prospects of FDI into China, while two remain neutral".

On balance, it seems foreign companies still believe the future in China holds improved prospects for profit-making compared with the achievements of the past.

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About Fusion Consulting

Fusion Consulting is a business intelligence consultancy providing strategic advice on Asia-Pacific markets. With offices in Singapore and Hong Kong and a network of 200 consultants in 14 countries, the company conducts custom research and consulting to help companies understand their markets, compete more effectively and grow into new areas of opportunity. www.fusionc.com

For further information please contact media@fusionc.com or Peter Read, Director, Singapore office, Tel +65 6423 1681.