The survey also found that U.S. companies viewed their Chinese rivals as more advanced on six of the eight criteria, including speed to market and adoption of artificial intelligence.
U.S. President Donald Trump’s clampdown on China and the frosty relationship between the two countries have reportedly led American businesses to look elsewhere.
The American Chamber of Commerce (AmCham) said in Shanghai on Wednesday that about 47% of U.S. businesses surveyed said they have redirected planned China investments over the past year, marking the highest on record, a CNBC report stated.
The survey was conducted by the association between May 19 and July 20, and the question about investment intention was first asked in the study in 2017.
The respondents said they had diverted their investments to Southeast Asia — a region comprising countries like Thailand, Vietnam, Cambodia, Indonesia, Laos, Myanmar, Malaysia, Singapore, the Philippines, and Brunei.
The investment destination that was favored after Southeast Asia is the Indian subcontinent, comprising countries such as India and Bangladesh, followed by the U.S. and Mexico.
Apple, which was almost entirely reliant on China and Chinese firms operating in Taiwan before it began diversifying its supply chain amid geopolitical challenges, has stepped up its efforts in that direction. The tariff standoff has forced the company to manufacture most of its U.S.-bound iPhones in India.
The equity markets of both countries have largely shrugged off the tariff threat. The SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ), exchange-traded funds (ETF) that track the S&P 500 Index and the Nasdaq 100 Index, have gained 11.63% and 13.85%, respectively, for the year. Meanwhile, the iShares MSCI China ETF (MCHI) has risen a steeper 35.71%.
AmCham Shanghai President Eric Zheng reportedly suggested the 90-day pause the U.S. and China agreed to in August may not be an incentive for the American firms. “For a company, 90 days, that’s just way too short,” he said, adding that supply chain planning is done for a longer term.
After the U.S. announced steep tariffs as part of the “Liberation Day” levies in early April, the rates were ratcheted up following moves and counter moves. Since then, the two countries have met at least three times to resolve the trade dispute, although a preliminary framework agreement is yet to be worked out.
AmCham Chair Jeffrey Lehman said China’s retaliatory tariffs also dampened investment decisions as inputs used to build products are often sourced from the U.S.
The survey also found that U.S. companies viewed their Chinese rivals as more advanced on six of the eight criteria, including speed to market and adoption of artificial intelligence (AI).
Information available on AmCham’s website showed it has more than 3,000 members, including over 1,000 companies ranging from startups to the largest global multinational corporations. It counts among its members companies such as Apple (AAPL), Google (GOOGL), 3M (MMM), Cisco (CSCO), Ford (F), Meta (META), Tesla (TSLA) and NXP (NXPI).
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