U.S. firms' optimism on China ebbs, wary of local rivals: survey

[September 27, 2014]  WASHINGTON (Reuters) - U.S. companies are increasingly less optimistic about the business outlook in China, and see growing competition from local rivals who get preferential treatment as a key challenge, a survey showed on Friday.

A US-China Business Council survey of senior executives at its 200-plus member companies showed ebbing optimism about the five-year business outlook for China, which is grappling with slowing economic growth.

The 2014 survey, which will be formally released on Monday, showed 31 percent of respondents were "optimistic" about the mid-term outlook, compared with 39 percent in 2013, although the share of those saying they were "somewhat optimistic" rose.

Eighty-three percent said their Chinese operations were profitable, down from 91 percent in 2013. Half planned to increase resources invested in China in the next 12 months.

The number one challenge U.S. companies faced in doing business in China was competition from domestic rivals, the survey showed, followed by enforcement of intellectual property rights and foreign investment restrictions.

"Optimism continues to be tempered by policy uncertainty," USCBC President John Frisbie said in a statement.

The organization's members include Chevron Corp <CVX.N>, IBM Corp <IBM.N>, Google Inc <GOOGL.O> and Wal-Mart Stores Inc <WMT.N>.

Most of those surveyed thought Chinese competitors, both state and privately owned, received benefits that foreign companies did not, such as preferential financing or tax benefits. Competition from domestic companies was also seen as the main restraint on profits, followed by rising costs.

Almost nine in ten companies were at least somewhat concerned about China's antitrust laws. Regulators have investigated dozens of foreign companies over alleged anti-competitive behavior, and almost one in three USCBC members were worried they would be subject to an investigation.

(Reporting by Krista Hughes. Editing by Andre Grenon)

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