Last time I was in China, two American consultants all but whispered to me “the secret nobody wants China to know:” American companies make greater profits in China than they do in the United States. Both people then cited an AmCham survey which got plenty of press when it came out earlier this year. So do not blame me for blowing the secret.
And now the Wall Street Journal says the same thing, in an article, entitled, “China Begins to Fulfill Its Potential for Big Profits Foreign Firms Are Cashing In After Years of Anticipation As Growth Transforms Nation.”
China now “represents not only a fast-growing source of revenue for many multinational companies, but also a rising source of profit.” For example, China has become “the world’s biggest market for cellphones, with more than 500 million wireless subscribers; that makes it crucial to companies such as Nokia Corp. and Motorola Inc.” It is now second to the U.S. in number of Internet users, which makes it important to companies like Sun Microsystems, which expects its China revenue in China to double within three years, surpassing Japan as its biggest Asian market. “China is the second-biggest market, after the U.S., for personal computers and cars. It also accounts for a huge share of the global demand for commodities such as iron ore, driving growth for mining interests such as Rio Tinto.”
The U.S.-China Business Council and the European Union Chamber of Commerce revealed that more than 80% of respondents reported their China operations were profitable last year.
Foreign companies doing business in China typically make higher profits in China than they do elsewhere.
The secret is out.