As Congress Blusters About Trade With China, U.S. Companies Play Coy Over Profits
Hong Kong -- AMERICAN COMPANIES operating in China enjoyed another year of strong profits in 2005, possibly even setting a record. But you would hardly guess it from company statements or the negative vibes on trade with China coming out of Congress these days.</br></br>Corporate America often seems to go out of its way to hide its successes in China. That may not be the smartest strategy as U.S. politicians girding for a possible trade war highlight the corporate losers of trade with China, while ignoring the many winners.</br></br>According to the Bureau of Economic Analysis, U.S.-affiliated companies in China -- companies in which U.S. firms have at least a 10% stake -- earned $3 billion in 2004. That's up from zero in 1990. Joseph Quinlan, chief market strategist for Bank of America, says that figure is a good reflection of how U.S. companies are making out in the world's fourth-largest economy. He estimates earnings reached a record $3.2 billion in 2005.</br></br>True, corporate profits from China accounted for just a sliver of the $209 billion earned by U.S. affiliates world-wide in 2004. Japan yielded $11.3 billion; Mexico, $7.6 billion. But China is becoming an increasingly attractive market for U.S. companies, even in some of the most competitive industries.</br></br>Take the auto sector. As its losses piled up in the U.S., General Motors Corp. reported income from China of $218 million for the first nine months of 2005. This nugget was buried in GM's filings to the Securities and Exchange Commission.