1、 Redefining resilience 2019 China CEO Outlook Agile or irrelevant Overview Chinas CEOs face a number of headwinds, as do their global counterparts. With a volatile global economic outlook and ongoing US-China trade tensions, these uncertainties are bound to have some impact on overall business senti
2、ment. This report summarises the China findings from a global survey of 1,300 CEOs including 125 from companies headquartered in mainland China and Hong Kong (China CEOs) across a wide range of industries, providing insights into investment priorities, growth strategies, and key concerns. The survey
3、 findings suggest that despite the rapidly changing business environment as a result of both domestic and external developments, China CEOs are confident in the resilience of their companies, and in their ability to innovate, disrupt and adapt. They are also proactively thinking about investing in n
4、ew technologies to be ahead of the competition; and are placing increasing importance to partnering in order to achieve their growth objectives. Confidence While China CEOs have become less optimistic about the growth prospects of the global economy, their confidence in the growth prospects of their
5、 country has increased, and they continue being overwhelmingly confident in the growth prospects of their companies, with most expecting to see top-line revenue growth and an increase in headcount over the next three years. Risks to growth When asked about the greatest threat to their organisations
6、growth, “environmental/climate change risk” was selected by more China CEOs than other options, closely followed by a “return to territorialism” . Consistent with this, over two-thirds of China CEOs told us that their organisations growth will be determined by their ability to anticipate and navigat
7、e the shift to a low-carbon, clean technology economy. Of the China CEOs selecting “return to territorialism” as the top risk, 46 percent said they were most concerned about the ongoing China-US trade negotiations. Expansion into new markets and M (ii) diversifying their business; and (iii) transfor
8、ming their business model faster than what organic growth can deliver. 2019 KPMG Huazhen LLP a Peoples Republic of China partnership, KPMG Advisory (China) Limited a wholly foreign owned enterprise in China, and KPMG a Hong Kong partnership, are member firms of the KPMG network of independent member
9、 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Innovation and technological disruption How to innovate, disrupt and adapt to a changing business landscape continues to be front of mind for China CEOs. Most consider technological dis
10、ruption as more of an opportunity than a threat, and over two- thirds told us that their companies growth relies on their ability to disrupt “any business norm” . Over half of China CEOs also told us that they are actively disrupting the sector in which they operate rather than waiting to be disrupt
11、ed, a significant increase from last year. Consistent with this, over two-thirds of China CEOs said that they are placing more capital investment in buying new technology in order to improve their companies resilience, and all surveyed China CEOs told us that their companies are either piloting or i
12、mplementing AI to automate processes. Taking into account the fast-paced development of Chinas digital economy, it was also not surprising to find that almost all surveyed China CEOs expect to see a significant return on investment from their digital transformation programs in the next three years.
13、Agility and partnering China CEOs recognize that their ability to disrupt the market must be complemented with an ability to adapt quickly and efficiently to changes and disruptions coming from others they understand they need to be agile to survive in the market. And while a majority of China CEOs
14、believe that acting with agility is the “new currency of business, ” over 60 percent told us that the only way for their companies to achieve the agility they need is to increase the use of third-party partnerships. Consistent with this, China CEOs told us that the most important strategy to achieve
15、 their companies growth objectives over the next three years will be to enter into “strategic alliances with third parties” . Final word Despite the current global economic and geopolitical uncertainties, China CEOs are continuing with their growth and expansion strategies. They recognise the challe
16、nges of operating in a rapidly changing business landscape, which are likely to become a new reality. Innovation, meanwhile, continues to be at the forefront of competitor differentiation, while key national initiatives such as the Belt and Road and the Guangdong- Hong Kong-Macao Greater Bay Area of
17、fer unique opportunities for government and the private sector to collaborate on projects that can bring lasting benefits. As with their global peers, China CEOs need to continue to strengthen their capabilities and pursue strategies for sustainable long-term growth. This focus on agility is redefin
18、ing what is understood by resilience. In the past, organisations looked to defend their positions and use scale to maintain competitive advantage. But now, against a complex, volatile and increasingly uncertain environment, organisations need to be comfortable disrupting their business models and ad
19、apting to a constantly changing world if they want to achieve their growth objectives. 2019 KPMG Huazhen LLP a Peoples Republic of China partnership, KPMG Advisory (China) Limited a wholly foreign owned enterprise in China, and KPMG a Hong Kong partnership, are member firms of the KPMG network of in
20、dependent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2019 China CEO Outlook / 1 Survey highlights Confidence China CEOs have become more cautious in their views about the global economy, but continue to maintain a positive
21、 view about the growth prospects of China and their own companies Fewer China CEOs surveyed this year are confident in the growth prospects of the global economy compared with 2018 (See Figure 1). Less than half (48 percent) told us they are confident or very confident in the growth prospects of the
22、 global economy, down from 76 percent last year. But despite what this result might suggest, China CEOs have actually not turned pessimistic, as a large proportion of them hold neutral views with regards to the growth prospects of the global economy (43 percent). In other words, China CEOs have beco
23、me more cautious in their views about the world economy. Comparatively, global peers are more optimistic about the outlook of the global economy this year, with 64 percent of them responding that they are confident or very confident in its prospects, while 31 percent hold a neutral view. China CEOs
24、also feel less confident about the growth prospects of their industry compared with last year, with the proportion of respondents who feel confident or very confident having declined to 70 percent from 82 percent in 2018. Again, a large proportion of respondents (30 percent) were neutral on this que
25、stion, suggesting a more cautious attitude rather than pessimism. In contrast, there was a slight rise in the percentage of global peers that are optimistic about the prospects of their respective industries, from 78 percent in 2018 to 81 percent in 2019. 2019 KPMG Huazhen LLP a Peoples Republic of
26、China partnership, KPMG Advisory (China) Limited a wholly foreign owned enterprise in China, and KPMG a Hong Kong partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
27、2 / 2019 China CEO Outlook Figure 1: China CEOs confidence in the growth outlook 20182019 Source: KPMG 2019 Global CEO Outlook Global economy Country Industry Company Overall confident Overall confident Overall confident Overall confident Neutral Neutral Neutral Neutral 76% 19% 43% 26% 18% 30% 10% 6
28、% 90% 94% 82% 70% 20% 71% 77% 48% $ While the above results might suggest otherwise, China CEOs continue to be confident in the growth prospects of their country as well as their companies. Over three quarters of China CEOs polled (77 percent) told us they are confident or very confident about the p
29、rospects of their country, up from to 71 percent last year. In comparison, 83 percent of global peers say they are confident or very confident about the growth prospects of their respective countries. Additionally, China CEOs not only continue to be overwhelmingly confident in the growth prospects o
30、f their own companies, but their confidence levels have actually increased, from 90 percent in 2018 to 94 percent in 2019. In line with this, over the next three years, 98 percent of them expect to see top-line growth, and 96 percent an increase in headcount. This finding is on par with global peers
31、, of whom 94 percent also say they are optimistic about their companies growth prospects. In my conversations with China CEOs, it is clear that they are aware of the importance for China to continue to transition into a high value-added economy and are supportive of the measures that are being imple
32、mented to facilitate this process. This years survey results suggest that, while facing challenges, they remain confident in the direction of Chinas development and its long-term prospects. “ “ Honson To, Chairman, KPMG China and Asia Pacific 2019 KPMG Huazhen LLP a Peoples Republic of China partner
33、ship, KPMG Advisory (China) Limited a wholly foreign owned enterprise in China, and KPMG a Hong Kong partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2019 China CE
34、O Outlook / 3 Risks to growth Overall, China CEOs cite the top five risks posing the greatest threat to their organisations growth as: environmental / climate change risk (22 percent); a return to territorialism (21 percent); cyber security risk (14 percent); operational risk (13 percent); and emerg
35、ing / disruptive technology risk (12 percent) (see Figure 3). China CEOs continue to see “environmental/climate change risk” and a “return to territorialism” as the greatest threats to their companies growth The ongoing trade negotiations between China and the US have captured the attention of globa
36、l markets since they began over a year ago, sparking worries about the impact that a protracted trade dispute could have for global businesses. It was therefore not surprising to find that this was the most pressing issue for 46 percent of the China CEOs who chose a “return to territorialism” as the
37、 greatest threat to their companies growth. The second highest proportion, 38 percent, said they are most concerned about Brexit, while 15 percent said they are most worried about the rise of political parties with protectionist policies (see Figure 2). 46% 30% 38% 45% 15% 25% Figure 2: Top concerns
38、 regarding a return to territorialism China Source: KPMG 2019 Global CEO Outlook Note: Only respondents who cited “return to territorialism” as the top risk could answer. US-China trade negotiations Brexit The rise of political parties with protectionist policies Global (excluding China) 2019 KPMG H
39、uazhen LLP a Peoples Republic of China partnership, KPMG Advisory (China) Limited a wholly foreign owned enterprise in China, and KPMG a Hong Kong partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Sw
40、iss entity. All rights reserved. 4 / 2019 China CEO Outlook Figure 3: Risks that pose the greatest threat to growth 22% 20% 19% 21% 14% 15% 14% 14% 13% 12% Environmental/climate change risk Operational risk Return to territorialism Emerging/disruptive technology risk Cyber security risk Source: KPMG
41、 2019 Global CEO Outlook Note: partial list shown Global (excluding China) China That “environmental/climate change risk” emerged as the top risk helps to explain why over two-thirds of China CEOs (70 percent) believe that their organisations growth will be determined by their ability to anticipate
42、and navigate the global shift to a low-carbon, clean technology economy. 76 percent of global peers also agreed with this point (see Figure 4). 70% 76% 21% 17% 10% 7% Figure 4: Global shift to a low-carbon, clean technology economy will determine future growth China Percentage of CEOs who agree or d
43、isagree that their organisations growth will be determined by the ability to anticipate and navigate the global shift to a low-carbon, clean technology economy Overall agreeNeutralOverall disagree Source: KPMG 2019 Global CEO Outlook Global (excluding China) 2019 KPMG Huazhen LLP a Peoples Republic
44、of China partnership, KPMG Advisory (China) Limited a wholly foreign owned enterprise in China, and KPMG a Hong Kong partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserve
45、d. 2019 China CEO Outlook / 5 Expansion into new markets and M and 84 percent of all surveyed China CEOs told us that they are building their presence in these markets to “become more resilient as a business” . Importantly, this year we also noted a significant increase in the proportion of China CE
46、Os who plan to focus on expanding into developed markets, from 30 percent in 2018 to 44 percent in 2019. For those prioritising emerging markets, 33 percent want to expand to Central/South America; 27 percent to Eastern Europe; 17 percent to Africa; 11 percent to Asia Pacific; and 11 percent to the
47、Middle East. For those who want to expand to developed markets, 29 percent say they want to expand to Japan, Hong Kong and Singapore; 25 percent to North America; 25 percent to Australasia; and 20 percent to Europe. In addition, the China-initiated Belt and Road Initiative is front of mind for a maj
48、ority of global CEOs (i.e. China CEOs and global peers), with close to two-thirds of them 65 percent telling us that when expanding to emerging markets, they are prioritising countries and regions that form part of the Initiative (see Figure 6). The Belt and Road Initiative is giving rise to more co
49、operation opportunities between Chinese and foreign firms in emerging markets not only in infrastructure investment but across a wider range of sectors, including financial services, logistics, trade and even digital technologies. This type of cooperation can help unlock the socioeconomic development potential of host countries, while allowing Chinese and foreign firms to access new market opportunities, achieve synergies and manage risks. “ “ Vaughn Barber, Global Chair, KPMG Global China Practice 2019 KPMG