Two years after the financial meltdown, the confidence level among CEOs in Asia Pacific is returning to near pre-crisis levels. In PwC's 14th Annual Global CEO Survey, 54% of chief executives in the region say they are "very confident" of growth in the next 12 months, compared to the global average of 48%. This is an increase from the previous year when only 40% of CEOs in Asia Pacific felt this optimistic.
"CEOs have emerged from the bunker mentality of surviving the recession. They now see renewed opportunity for growth, even in the near term, and are determined to take advantage of better global economic conditions and increased customer demands," says Dennis M. Nally, chairman of PwC International.
Renewed confidence was spread across all countries within the region. CEOs in India (88%), China and Hong Kong (72%) and ASEAN (60%) were particularly upbeat about near term growth. Japan was the least confident (25%). Globally, chief executives in Western Europe were not as optimistic as their Asian counterparts, with only 39% expressing their confidence that things are finally turning around.
In the longer term, 95% say they have some level of confidence for growth prospects over the next three years, an increase of six percentage points from the year before.
Asia continues to be firmly on the radar for CEOs globally. Almost 90% expect their operations to grow in the region in the next one year, with China considered as the most important country for growth. India was also seen as a critical market for future growth.
"Emerging economies are growing at rates faster than the developed countries. And a lot of the growth story is in Asia. In fact, in PwC’s latest 'World in 2050' series, China is projected to overtake the US as the world’s largest economy by 2018 based on purchasing power. India is not too far behind. It’s expected to surpass the US as the world’s second largest economy by 2050. So, the question is not who’s betting on Asia, but who’s betting against Asia," says Frank Lyn, PwC Markets Leader for China. The positive momentum in CEO confidence was reflected in their hiring plans. CEOs in Asia Pacific were particularly bullish. More than half (62%) of CEOs in the region expect to add jobs in the next 12 months, up from 49% in the last survey. Significantly, just 10% of CEOs said they expect to cut their workforce in the coming year, down from 16% last year.
The hiring plan is tempered with the continuing war for talent which is now top of the agenda for CEOs in Asia Pacific in 2011. They’ve identified the major challenges over the next three years as: a limited supply of candidates with the right skills, 63%, losing top people to competitors, 47% and difficulty of deploying top talent globally, 47%.
"Experienced and skilled employees are a CEO’s best asset. The costs in lost productivity and re-training are becoming clear. In hot talent markets, turnover rates can be high. Annual staff turnover in China can reach 20% or even 40% in some sectors. In mature markets, as economies recover, turnover rates are likely to rise as employees regain confidence to explore their options. CEOs are well-advised to put in place strategies that’ll improve employee engagement and retention," says Lyn.
As a result, CEOs in the region are planning to invest in their people’s growth, and not through monetary compensation alone. Businesses are stepping up overseas deployments of key employees (65%). While some are tapping women as an under-utilised source of talent (44%) and retaining workers past their retirement age (49%).
Just as overall confidence hinges on the recovery of the global economy, the greatest collective concerns for CEOs in Asia Pacific revolve around the direction of the world economy. 89% of CEOs say they’re concerned about the uncertain or volatile economic growth to their business prospects. Exchange rate volatility and over-regulation also top the worries of most CEOs. While chief executives in Japan and Australia are not as worried about inflation, with only 17% and 28% respectively citing it as a concern, their counterparts in China (70%) and India (75%) are worried about the impact of increasing consumer prices on their business.
With the recent recession still fresh on their minds, and a change in customer needs, CEOs have changed, or are changing, their strategies. Innovation is key, with an emphasis on developing new products and services for key growth markets. Getting the right talent in place and working closely with partners and the government are some of the changes CEOs are instituting to compete in a new world order.
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