A huge majority of US businesses operating in China reported increases in annual revenues last year and 92 percent said their five-year business outlook in China is "optimistic" or "cautiously optimistic," according to the results of a survey released yesterday by two American chambers of commerce.

About 86 percent of respondents said they posted higher revenues in 2004 compared to the previous year; and 68 percent were "profitable" or "very profitable" last year, according to the 2005 White Paper on American Business in China.

The white paper, the seventh annual report of its kind, was published by the American Chamber of Commerce in China (AmCham) and the American Chamber of Commerce in Shanghai, and covered a wide range of sectors, from manufacturing, trade and distribution to services. It was based on a survey of nearly 2,000 members of the two chambers.

The nationwide survey also showed that US companies had great confidence in China's business environment.

"The vast majority of survey respondents - 93 percent - report that China's economic reforms have improved the climate for US businesses, and 92 percent said their five-year business outlook in China is 'optimistic' or 'cautiously optimistic'," according to the white paper.

At the same time, US businesses are facing increasing competition from both local companies and foreign rivals.

Profitability in 2004 was slightly lower than in the previous two years, indicating more challenges.

"We attribute the leveling margin to both improved markets elsewhere and to US firms' financial performance in China more closely tracking their global performance as China revenues grow," the white paper reported.

It explained that factors such as price pressure from major customers as well as changes in market and commodity prices, and salaries, are driving down margins. But the white paper added this was minor compared to the continuity of higher profitability since China joined the World Trade Organization.

Despite increasing challenges, most US companies said they would expand business activities in China.

According to the white paper, intellectual property rights remain the main concern of US companies in China, in particular, enforcement by local governments.

Emory Williams, chairman of AmCham China, said the annual white paper made suggestions not only to the Chinese government but also to the US administration.

For example, Williams said, the US government should relax restrictions on issuing visas to Chinese.

According to the survey, the number of visas issued to Chinese nationals was up 23 percent compared to the previous year, but still less than before September 11, 2001.

(China Daily September 2, 2005)