Over a third of senior business executives from Mainland China and Hong Kong are “very confident” about their companies’ prospects for revenue growth over the next 12 months, an increase from 25% in 2016, according to PwC’s China report of the 20th Global CEO survey.
Meanwhile, the ‘Belt and Road’ initiative is considered as a key part of organization’s business expansion strategy, as nearly 60% of executives in China saw investment opportunities emanating from the initiative, especially in infrastructure development.
China’s executives were more positive than their peers about global economic growth over the next 12 months (China 31% vs. globally 29%).
Executives in Mainland China and Hong Kong considered Beijing, Shanghai and Hong Kong as the most attractive cities to organization’s overall growth prospects over the next 12 months, whereas New York and Singapore are ranked in fourth and fifth respectively.
“Despite a turbulence in 2016, China’s CEOs are moving back up. They are more confident in the opportunity for growth over the next 12 months,” says Frank Lyn, Senior partner of PwC Hong Kong. “Meanwhile, China is still considered as one of the most attractive investment places in the world. The ‘Belt and Road’ initiative will provide more investment opportunities for companies and help to improve the business environment in the coming months.”
Primary activities to drive growth and profitability
To drive their growth strategy and profitability in the next 12 months, high proportion of executives in China cited organic growth (67%), entering into a new strategic alliance/joint venture (54%) and new M&A (32%) as the primary activities. Strengthening innovation and digital capabilities are necessary to capitalize on new opportunities.
The labour market is facing a mismatch of skills demand and supply. Nearly 60 percent of executives in Mainland China and Hong Kong expect to increase their headcount in the next 12 months. However, 85% are worried about the availability of key skills and they find “somewhat” or “very difficult” to recruit people with creativity and innovation (79%), leadership (70%) and problem-solving skills (64%).
Companies in China are leading the world in the application of technology by adopting and prioritizing digitization in order to capture economic and productivity benefits.
Nearly half of the respondents in China believe that technology is to be used to improve people’s well-being. But China’s CEO also have serious concerns on cybersecurity and data privacy breaches, amongst the CEOs surveyed in China 66% of them “agree” or “agree strongly” that how they manage people’s data will differentiate them from their competitors.
Given the lack of trust in the digital age, companies will have to build and sustain stakeholder trust and confidence through actions such as enhanced management of cybersecurity, digital and data risks.
China has benefitted from globalization and there is consensus amongst executives in China and globally that globalization has improved the ease of moving capital, people, goods and information.
Half of CEOs in China (compared to 38% of their global counterparts) believe that globalization has helped “to some extent” to reduce the gap between rich and poor.
The dramatic political outcomes of the last few months are demanding change to the business as usual model. In China, 86% of executives told us that it is more important to run business in a way that accounts for wider stakeholder expectations. Business leaders today have a great opportunity and responsibility to lead through the disruptions by demonstrating purpose and increasing trust through corporate behavior and to work in partnership across sectors towards shared goals that leads to positive outcomes and real returns for all stakeholders.