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American businesses operating in China have started to feel the pinch as the Chinese economy plunges into recession. A ferocious trade war with the U.S that has resulted in trade tariffs continues to hurt revenues. Reduced investment, as well as job cutbacks, have become the order as the companies try to navigate the choppy marketing environment.

Slowing Chinese Economy

A study by the American Chamber of Commerce indicates that as many as 51% of American businesses operating in China have started to feel the effects of the trade tariffs. While most of the businesses remained profitable last year, the same is not the case in 2019. Only 61% of the business remain optimistic about long-term prospects while operating from China, compared to a routinely 80%.

A slowing Chinese economy has emerged as a more pressing issue that could derail U.S Company’s outlook. The fact that optimism about China is at an all-time low raises serious concerns as to whether companies will be able to ramp up investment. Concerns as to whether the business sentiments will improve has forced most of the companies to rethink their long-term plans.

Cutting Back on Investments

China looks set to remain under pressure as a number of American companies have hinted at the possibility of cutting back on investments. In the recent past, a number of companies led by GoPro Inc. (NASDAQ: GPRO) have relocated part of their production operations from the country in response to the trade tariffs imposed by the U.S.

Manufacturers starting to explore other locations outside China spell more trouble for the Chinese economy that is under immense pressure. The likes of Home Depot Inc. (NYSE: HD), Best Buy Co Inc. (NYSE: BBY) and Urban Outfitters, Inc. (NASDAQ: URBN) have started working with suppliers that source products out of China as they seek to shield themselves from the trade tariffs imposed by President Donald Trump.

Even though the Chinese consumer market is one of the reasons why most U.S companies have operations in the country, most of them have had to rethink their plans on concerns they could be targets of a ferocious trade war. The only way out of the debacle, is the U, S, and China reaching a trade truce.