US firms in China more pessimistic than a month ago on rebounding from coronavirus: March survey

Half the 119 US companies surveyed said they've had "significant revenue declines", and more than half say they expect revenue from China to fall this year if they can't get back to normal work levels by the end of April.
Half the 119 US companies surveyed said they've had "significant revenue declines", and more than half say they expect revenue from China to fall this year if they can't get back to normal work levels by the end of April.PHOTO: AFP

BEIJING (BLOOMBERG) - American firms in China are increasingly pessimistic about how quickly they can rebound from the coronavirus, with less than a quarter back at normal work levels.

The outbreak and the government's efforts to halt the spread from late January halted much business activity across China. Half the 119 US companies surveyed said they've had "significant revenue declines", and more than half say they expect revenue from China to fall this year if they can't get back to normal work levels by the end of April.

Only 22 per cent of the companies surveyed by the American Chamber of Commerce in China said they're back to normal, while a quarter expect to be there by the end of April.

Another 22 per cent of firms said they expect further delays through the summer.

While the sample size is small and foreign companies aren't representative of the broader economy, that resumption rate is well below official claims that over 90 per cent of manufacturing companies and more than 60 per cent of services firms are back at work.

"Our member companies are still wrestling with challenges brought by the epidemic, and there's now concern about the global impact," said AmCham China Chairman Greg Gilligan.

"Since our last survey, this has now become a worldwide pandemic and close to half of the companies said the global spread of the virus would have a moderate-to-strong impact on their China operations."

The survey, conducted between March 13 and 18, showed companies have a more pessimistic outlook compared with a previous survey in February.

Almost 40 per cent said demand for their products is down, compared with 22 per cent in February.

 
 

However, the uncertainty is yet to seriously impact plans for the year, at least for larger companies.

Forty per cent of respondents said they won't change their planned investment in China, up 17 percentage points from last month's survey.

Digging below that headline number, 45 per cent of companies with fewer than 250 employees said they would cut their planned spending, while half of firms bigger than that size will be keeping their plans the same.