China CFOs Underscore Importance of Business Strategy amid Economic Slowdown

by CFO Innovation Asia Staff, 19 June 2012

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business strategy capital costs corporate governance Deloitte economic outlook

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China's Chief Financial Officers (CFOs) have high on their agenda the ability to cope with regulatory and policy changes, as well as the global economic outlook which they regard with some scepticism, finds a Deloitte survey.

"Survey results indicate growing concerns over the prolonged issues in Europe. CFOs have expressed concerns about the negative impact of weakening export demand despite efforts by the government to reduce the current reliance on foreign demand," says Chris Lu, CEO, Deloitte China.

China has experienced annual GDP growth of over 8 percent since 2002. However, the Chinese government has cut its GDP target for 2012 to 7.5%. Deloitte's survey found the majority of respondents (72 percent) are pessimistic about the U.S. and European economies, and 70 percent also anticipate an economic slowdown in China.

Over half the CFOs (52 percent) were concerned about capital cost/availability, possibly reflecting funding difficulties in the current environment.

The survey also revealed that CFOs appeared to be aware of the challenge from policy and regulation, which was cited by almost half (46 percent) as one of their top three industry challenges in China.

In addition, over one third of CFOs (37 percent) also cited financial and corporate governance policies, (accounting, reporting and control), among the top three challenges faced by their companies.

"The survey results reflect recognition by China CFOs of the importance of adapting efficiently to new regulations and policies when doing business in China," says Danny Lau, Leader, Deloitte China CFO Program.

Lau says the surveyed CFOs are being prompted by their CEOs to give serious focus to strategy development and execution. "Economic uncertainty and regulatory challenges seem to have elevated business strategy to a higher priority over risk and performance management," notes Lau.

The report notes a divergence of opinion on whether the recent economic turmoil will affect corporate earnings.

Given the prevailing environment, however, many CFOs mentioned revenue growth and preservation as their business focus for the next 12 months and the challenge of maintaining revenue growth in both new and existing markets, regardless of the size and industry categories of their companies.

Against this backdrop, CFOs also appreciated the importance of adequate talent support to achieve revenue growth. In China, unique challenges include talent recruitment, skills availability, morale and human capital costs.

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CFO Innovation Asia Staff

Quote Image:

Even business two-way radios

Submitted by James Loftcraft on 14 July 2012 - 8:44pm

Even business two-way radios companies have adjusted their strategy for the slowdown of the market in some sectors. It all depends on how good is your marketing department.

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