China private company report

Greater trade openness benefits private firms

Although local Chinese firms are facing a more ambiguous global trade atmosphere, precipitated by escalating tension in Sino-US trade relationship in recent months, the private sector is bullish on the progress of free trade across the Asia Pacific region. In particular, the BRI initiatives, which have paved the road for greater connection between China and member countries, are expected to unleash unprecedented opportunities for private companies in areas such as railways and energy – which were previously dominated by state enterprises.

Higher proportion of executives in China are optimistic about trade progress in Asia Pacific, while there is no change in proportion of executives who feel that progress has been slow

Private companies are positive on domestic demand

The private sector is prudently optimistic about the commercial environment in China. The survey found that a larger proportion of  private company executives in China are “very confident” about their company’s prospects for revenue growth in the next 12 months than in 2016 and 2015. In light of this, 59% consider developing new products and services for existing markets in China as the top strategy for their organisation to undertake over the next three years. 49% of respondents plan to adopt a market expansion strategy to sell products and services to different end-markets, while the same proportion is considering building their brand in China.

Percentage of executives who are pursuing the following strategies in the next 3 years to tap into growth opportunities in China

Driving overseas growth is key

China’s private sector demonstrates greater readiness towards expanding their global footprint via outbound investment. There has been an increase in the proportion of private company executives who plan to increase their global investments in the next 12 months compared to 2016. To increase their competitiveness and secure growth in overseas markets, 68% are conducting more value-add activities domestically such as R&D, 65% rely on business partnerships/joint ventures, and 60% are re-prioritising economies and markets for investment.

Percentage of executives in China who will adjust their workforce strategies in the next 3 years to adapt to and profit in the digital age

Staying relevant in the age of automation

AI, robotics and automation are not only changing products and services but also transforming the workplace. According to the survey, the percentage of private company executives in China that are automating certain functions in their organisation will increase from 62% today to 83% in three years. Over the same period, the proportion of executives that are identifying workers who are skilled at using new automation tools is expected to increase from 37% to 75%.

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Elton Huang

China Central Markets Leader and China and Hong Kong Entrepreneurial and Private Business Co-Leader, PwC China

Tel: +[86] (21) 2323 3029

Stephen Wong

China Telecommunications Leader and China and Hong Kong Entrepreneurial and Private Business Co-Leader, PwC China

Tel: +[86] (10) 6533 2255

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