US firms still keen on China

US companies are increasingly keen to do business in China, despite facing the same challenges reported five years ago.

That's according to the 2007 China Business Report, released by the American Chamber of Commerce (AmCham) in Shanghai on Friday. The report is based on the chamber's annual China Business Survey, to which 267 of its 1,600 corporate members responded.

The results indicate that US companies in China see it as a destination for investment and business, with many planning to increase spending in the nation.

"The most significant trend is that US companies are keen on doing business in China, despite the challenges they meet," said Brenda Foster, president of AmCham Shanghai.

"Overall, US businesses in China continue to increase their investments in China and expand.

"Despite the positive outlook and improved operating margins, competitive forces and rising costs are increasingly squeezing margins for US companies."

Foster said the top challenges identified by respondents are consistent with its previous surveys, which began in 2003.

"The most important change for 2007 is that human resource constraints, such as attracting and retaining qualified staff, have become the top challenge," said Foster.

Over 65 percent of respondents reported a negative impact on business operations in China because of difficulty attracting, developing and retaining skilled, technical and managerial staff.

According to HR expert Stephanie Liu of Armstrong World Industries, the imbalance in demand and supply of skilled staff is unlikely to change in the near future.

The survey found that top challenges also include the protection of intellectual property rights (IPR). But 50 percent of respondents said they believe IPR protection has improved.