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Businesses have adjusted to trade war, becoming more upbeat: AmCham Singapore poll
Despite lingering concerns about the US-China trade war, member businesses of the American Chamber of Commerce Singapore (AmCham Singapore) seem to have got a handle on the situation and are projecting a mostly positive business outlook for the next six months.
South-east Asia also appears to be benefitting from some positive effects of the trade war, with almost nine out of 10 respondents to an AmCham Singapore survey conducted in May 2019 ( Please see amendment note) considering it an equally attractive or more attractive place to do business now.
AmCham Singapore released on Wednesday the results of its latest survey examining the effects of the trade war. The first survey was conducted in September 2018.
The survey polled 144 companies, about 90 per cent of which work either globally, across Asia-Pacific or across Asean. About 61 per cent are American-based firms, and 84 per cent are from the services, manufacturing or technology industries.
Nearly half of the companies said they have experienced a negative impact from the trade war, up from four in 10 in the previous survey. American firms remain the most likely to be negatively affected, with 58 per cent of them reporting such impact compared with 31 per cent of non-American firms.
About 43 per cent of the affected companies said they had been impacted more by US tariffs compared with Chinese tariffs, while 41 per cent said both sets of tariffs had affected their business. Just 16 per cent said they had been affected by the Chinese tariffs more.
"One key takeaway (from this survey) is that the puzzle of the global manufacturing footprint and supply chains is very complex, and it's quite simplistic to think of this as purely a bilateral feud," said Gerry Mattios, expert vice-president at Bain & Company, which partnered AmCham Singapore to analyse the survey results.
However, although 81 per cent of business leaders expressed concern about the ongoing trade war, a majority of 78 per cent see either a positive or neutral outlook over the next six months. More than 70 per cent believe the trade war will either worsen or continue as it is, while fewer than one in three believe it will be resolved soon.
About half of the respondents have shifted from their 2018 strategies in response to the trade war's effects, such as delays or cancelling of capital flows. This is an improvement from 2018, when 67 per cent of respondents said they had to shift company strategies from the previous year because of the trade war.
Mr Mattios noted that in 2018, companies were reacting abruptly to the tariffs or holding back while expecting the dispute to resolve within the next six months.
"What we see here in terms of the trade war is a much lesser impact on companies, which suggests that they are more mature about it, and they are taking a far more long-term view of how this is going to play out and whether this is going to go on for a few months or even years," he said.
The survey found that 42 per cent of these companies are considering moving sourcing away from China (up from 37 per cent in September), while 37 per cent are considering the same for the US (up from 29 per cent).
The percentage of companies which said they would consider relocating manufacturing out of China nearly doubled to 28 per cent from 15 per cent nine months ago. About 13 per cent said they would consider doing the same for manufacturing in the US, up from 10 per cent in 2018.
Clarification note: A previous version of this article stated the survey's date as June 2019. AmCham Singapore has since clarified that the survey was conducted in May 2019 and the results were published in June. The article has been revised to reflect this.