The American Chamber of Commerce in China has released its Second Joint Survey on the Impact of Tariffs. The survey received nearly 250 responses, with 61.6% manufacturing-related, 25.5% services, 3.8% retail and distribution, and 9.6% from other industries.
The negative impact of tariffs is clear and hurting the competitiveness of American companies in China. The vast majority (74.9%) of respondents said the increases in US and Chinese tariffs are having a negative impact on their businesses.
To cope with the impact of the tariffs, companies are increasingly adopting an “In China, for China” strategy (35.3 percent), or delaying and canceling investment decisions (33.2 percent). In China, for China is a strategy to localize manufacturing and sourcing within China to mainly serve the China market.
While over half of respondents (53.1%) have not seen any increase in non-tariff retaliatory measures by the Chinese government, roughly one in five have experienced increased inspections (20.1%) and slower customs clearance (19.7%).
Approximately 40.7% of respondents are considering or have relocated manufacturing facilities outside China. For those that are moving manufacturing out of China, Southeast Asia (24.7%) and Mexico (10.5%) are the top destinations.
Global economic uncertainty is having a limited impact on Hong Kong’s employment market, which is buoyed by the development of the Greater Bay Area, government incentives for innovation and technology and the completion of key infrastructure projects. This is according to KPMG, which released its third annual Hong Kong Employment Trends Survey and Salary Outlook this week. Highlights included:
72% of respondents working in C-level positions or in human resources said they planned to increase (35%) or maintain (37%) existing headcount
37% in financial services and 45% in innovation and technology said they would increase headcount, although the figure last year was higher (46%) for financial services
53% of respondents said they would consider working in other GBA cities, with Shenzhen, Macau and Guangzhou being the top three choices
The top four considerations for respondents to work in these three cities were higher pay (58%), better career and industry prospects (56%), broader work exposure (54%) and travel convenience (52%)
The top four industries in which respondents thought the GBA development would create more jobs were innovation and technology (46%), financial services (36%), professional services (31%) and trade and logistics (29%)
Recent KPMG analysis found tax incentives to be instrumental in facilitating the free movement of people within the GBA, especially for high-income individuals working within the region. In early 2019 various exemptions from China’s new personal income tax were introduced, allaying Hong Kong residents’ concerns over a reduction in post-tax income when working on the mainland.