US presence shows strong China ties

The attendance of high-ranking US government officials and executives of multinational businesses at the APEC summit is a clear indication of the constantly expanding and mutually beneficial relationship between the countries, according to Harley Seyedin, president of the American Chamber of Commerce in South China.

Seyedin said in a recent interview with China Daily that he expects the APEC meeting to produce immediate results in many areas, from easier visa processes for Chinese and US citizens to the opening of additional areas for investment. [Special coverage]

"We also see future results through better understanding between China and the US and an accelerated process for a bilateral investment treaty," he said.

Earlier this week, leading US and Chinese business organizations expressed strong support for completing a high-standard bilateral investment treaty, with all US chambers of commerce in China calling for the work on the treaty to be finished as soon as possible, he said.

The chambers argue that huge potential for bilateral investment exists, which promises to be a defining feature of the commercial relationship in the future. The bilateral investment treaty would provide a better framework to guide the development of a healthy and mutually beneficial investment relationship, he said.

A report released last month by Boston Consulting Group said major US manufacturers are increasingly moving production back to the US from China.

Rising labor costs in China, skilled labor in the US, shorter supply chains with reduced shipping costs for the US market, local control over manufacturing processes and improved quality and yield in the US are cited as reasons for such moves.

Seyedin said: "As you see from the transformation of our companies from manufacturing for exports to producing in China for China, it now makes financial sense for our companies to move simple labor and energy intensive manufacturing to other regions, including the US.

"This move is at the same time as they focus their efforts on innovation and value-added production for the Chinese market. It does not mean our companies are moving out of China, just that they are focusing on transformation to better serve the highly valuable Chinese market.

"China has now reached a point where it no longer needsto be the factory of the world for low-end energy and labor intensive products."

Members of Seyedin's chamber continue to report growth and profitability and an increasing desire for reinvestment in China to expand and to capture additional market share, primarily focused on producing goods and services for the Chinese market.

In the annual survey report released by the chamber in February, 72.9 percent of member companies focused on the Chinese market and not manufacturing in China for exports. In 2003, the number was less than 23 percent.

The chamber is conducting its annual survey, and early results indicate US companies will increase their investments in China substantially once the bilateral investment treaty is in place.

"This is significant when one considers that the more than 2,300 members of AmCham South China account for nearly 40 percent of all US-China business, trade and investment."

Such a treaty is also important in facilitating investment by Chinese companies in the US, Seyedin said.

"The US represents a large and established market that Chinese companies should not and cannot ignore. As Chinese companies go global, having a strong foothold in the US can help them look at other international markets."

"In many cases we find that Chinese companies who are now serving the US market from China are looking at setting up facilities to manufacture in the US for the US market, which is the same thing American companies have been doing in China for many years."

Seyedin said his chamber has been actively bringing groups from US cities and states to China to help promote opportunities in those locations.

On the ongoing reforms in China, Seyedin said they are already helping to build confidence among the member companies.

"The continued fight against corruption and the most recent announcements made after the Fourth Plenum of the 18th Central Committee of Communist Party of China, especially the move to govern by the rule of law, further opening-up, reduction of negative lists and increased transparency, are most welcomed by our companies.

"We look forward to supporting accelerated reforms by the Chinese leadership."