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Navigating the rising tide of uncertainty
23rd Annual Global CEO Survey China Report
A slowdown in trade and manufacturing, geopolitical uncertainty and a drop in foreign direct investment are some of the factors that have impacted the global macroeconomic environment over the past 12 months. PwC’s 23rd Annual Global CEO Survey China Report sheds light on how executives are navigating this environment and their strategies for enhancing growth and profitability.
Please note that since the survey period September to October 2019 was prior to the COVID-19 outbreak in late January 2020, the results do not reflect the CEO sentiments due to the impact of the COVID-19. The survey results are a barometer of the CEO sentiments primarily due to US-China trade tensions, therefore the results should be interpreted in that context.
Explore the key themes of this year’s findings
Future growth and revenue expectations
Mainland Chinese CEOs remain positive about global economic growth amidst uncertainty
84% of Mainland Chinese CEOs expect global economic growth to improve over the next 12 months. A far lower proportion of CEOs globally (22%) and in Hong Kong (12%) share the same sentiment.
Executives focus on product and service innovation to promote revenue growth
70% of Mainland Chinese CEOs plan to launch a new product or service (Hong Kong: 65%; Global: 60%) and 60% plan on generating operational efficiencies in order to fuel growth (Hong Kong: 71%; Global: 77%).
Most important external markets for growth prospects
Australia remains the preferred territory for 45% of Mainland Chinese executives, followed by France (21%) and Canada (19%).
Threats to growth and solutions
Trade tensions are still the top macroeconomic threat
CEOs in China cited trade tensions (China: 60%; Global: 73%), geopolitical uncertainty (China: 56%; Global: 73%) and terrorism (China: 55%; Global: 45%) as top three economic, policy, social and environmental threats to growth in 2020.
Chinese chief executives are adapting to the “new normal”
55% of Chinese executives stated they are adjusting their supply chain and sourcing strategy as a consequence of the trade tensions (Global: 37%) which is lower than 64% who reported the same adjustment strategies last year. This indicates that the executives in China had already made this adjustment in strategy last year in anticipation.
CEOs face newer and more diverse business threats to growth
53% of Mainland Chinese CEOs cited misinformation (e.g. fake news) (Hong Kong: 62%; Global: 50%), 49% cited supply chain disruption (Hong Kong: 50%; Global: 50%) and 49% cited cyber threats (Hong Kong: 71%; Global: 73%).
Preparing the workforce for an uncertain world
Given the demographic shift alongside a diverse scope of challenges that Chinese CEOs are facing as the country undergoes deeper economic transformation, proactively securing and retaining a digitally-enabled, robust and agile workforce is no longer optional for businesses. While there is a keen shortage of new talent in many growth sectors especially in the realm of emerging technology, many companies are now putting faith in their existing employees by upskilling them for the future.
92% of Chinese respondents considered their upskilling programmes to be moderately effective or very effective in achieving higher workforce productivity (Global: 83%). The same percentage considered their programmes to be moderately effective or very effective in achieving improved talent acquisition and retention (Global: 80%), followed by 91% who cited stronger corporate culture and employee engagement (Global: 87%).
Dealing with changes in cybersecurity, data privacy, and digital behaviours
In terms of emerging technology areas that are important for business and government to collaborate on in order to build trust in society, the four main categories that Chinese respondents are prioritising include cybersecurity (China: 15%; Global: 27%), 5G cellular networks (China: 14%; Global: 7%), digital privacy (China: 13%; Global: 17%), and artificial intelligence (China: 12%; Global: 16%).
For Chinese business leaders, the key factors that have the greatest impact in shaping their cybersecurity strategy are cybersecurity and data privacy regulations (China: 55%; Global 59%), growing public concern over data privacy (China: 48%; Global: 48%), introduction of 5G cellular networks (China: 48%, Global: 18%), and adoption of IoT hardware and software (China: 47%; Global: 34%) respectively.
"A major challenge in society today is a growing need to address the skills gap created by automation and a lack of qualified talent. Chinese firms are encouraged to address the digital skill gap through employee upskilling programmes and workflow redesign"
Business implications
Chinese businesses have a key role to play to get ahead of the potential risks to growth and turn them into sources of competitive advantage.
Allocate resources strategically and remain agile to new opportunities that emerge
Continuously engage with policymakers to foster an open information exchange
Build capacity around detection and prevention of digital risks
Integrate socially responsible practices into business operations to mitigate social and environmental costs
Leverage policy measures and government-led initiatives to enhance growth
Put in place frequent workforce analysis and utilise upskilling programmes to re-educate employees and build trust
Explore our trends series
We’ve combined the insights from more than 3,500 CEO interviews with expert analysis to produce a series of reports across industries and critical topic areas. Stay tuned and explore our industry themes to learn about crucial trends and strategic options.
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Mainland China and Hong Kong Managing Partner - Markets, PwC China
Tel: +[86] (10) 6533 2838 / +[852] 2289 8288
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