U.S. companies continue to show impressive financial results in China's increasingly competitive domestic market and are confident about their business prospects moving forward, according to the latest China Business Survey, co-authored by Technomic Asia and AmCham Shanghai.

Despite their strong performance, companies express continued concerns over operational and policy challenges, including HR constraints, inadequate IPR enforcement, indigenous innovation and the regulatory environment.

The survey was conducted online from mid-November to early December 2010. A total of 346 companies participated. The findings include:

2010 was a strong year for U.S. companies in China, closing out the year with all-time performance highs.

• 87% report revenue growth, surging from 47% in 2009 and 77% in 2008 (almost ¾ of companies reported double-digit growth in 2010).

• 79% say they are in the black, up from 65% in 2009 and 70% in 2008.

• 61% state they are gaining market share for China products and services, up from 40% in 2009 and 52% in 2008.

2011 looks set to be a very good year for U.S. companies in China.

• 71% forecast revenue to increase over 10% in 2011.

• 41% expect to boost their China investment over 15% in 2011 - double that of the forecast for 2010.

• 90% have an "optimistic" or "slightly optimistic" five-year outlook for their China business.

U.S. companies remain concerned over operational and policy-based business challenges.

• The difficulty in finding, hiring and retaining enough qualified staff remains the No. 1 business challenge for the fifth consecutive year.

• Issues related to a problematic regulatory environment are top hurdles that can hinder growth and in some areas threatens full and fair access to the China market.

• A discouraging sign is 63% of companies feel the Chinese regulatory environment is getting worse or staying the same.

The "in China for China" trend remains strong.

A majority of companies:

• Say they produce or source goods and services in China for the China market as a primary strategy (55%), keeping pace with 2009 results.

• Have or are designing unique products or services to sell in China (72%).

• Import finished goods or parts from the U.S. into China (58%).

Companies feel confident despite some sentiments of a less than ideal environment.

Although some U.S. companies do not necessarily consider China as welcoming a business environment as they would prefer, they have come to expect challenges, have weighed them against the opportunities for market growth and have found a way to succeed in China nonetheless.

Source: Technomic Asia