CHINA TOPIX

Updated 2:00 PM EDT, Wed, May 20, 2020

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US Companies Bet On Local Chinese Local Customers To Drive Up Their Revenue

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(Photo : Image by Peggy CCI from Pixabay )

Image by Peggy CCI from Pixabay

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The Beijing-based American Chamber of Commerce in China released a survey that showed foreign companies have experienced significant revenue declines of up to 50 percent, a 28 percent increase from last month's yield.

The most pessimistic industry from the American Chamber of Commerce in China was the most pessimistic about the adverse impacts of the pandemic to economic growth this year. The results showed that 38 percent of the business respondents would continue to expect 50 percent decreases in revenue in the coming months.

The report also showed that American entities operating in China are still betting on the local consumers to drive their revenues upward amid business disruptions from the pandemic. About 119 companies operating in the country from March 13 to March 18 claimed that the consumer sector is the industry with the greatest hit.

According to AmCham China President Alan Beebe, the sector had the largest revenue disruptions despite being the industry with the greatest growth potential when it comes to technology. The sector was said to have maintained the influx of investment plans despite the local restrictions imposed after the pandemic. He also added that the industry's adverse hits would only be experienced in the short term and that there exist no fundamental changes in the market outlook.

The shutdowns in China have also led businessmen to assume that the global economy might experience a recession soon. The report claimed that financial markets might churn that would compel country leaders to establish necessary and blatant measures to control global economic decline.

It was also revealed that companies operating in the consumer discretionary sector particularly those that produce non-essential goods and services would experience significant losses as well. According to an analysis from FactSet, last March 20, products and services such as cars, entertainment, and apparel have blamed the pandemic for experiencing significant declines on their quarterly earnings calls.

Senior Earnings Analyst John Butters reported that for the 213 member companies of the S&P 500 index, foe the two terms that they were exposed to average revenue yields, they only generated six percent. When the pandemic was disturbed the country, the pandemic disrupted global supply chains and China experienced a significant decline in its economic growth rate.

AmCham chairman Greg Gilligan also said now that the pandemic is global, demand for the products and services of member companies have significantly declined due to disruptions of the supply chain. However, he noted that some members still enjoy constant consumer demand for necessary goods and services.

He also announced that member companies are implementing methods to cut their costs, revise their budgets, and change their financial projections to cope with the economic crisis for the year. However, these companies are challenged to stay afloat due to the necessary implementation of employee layoffs.

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