CEOs go bullish on growth prospects

More than 90 percent of CEOs in China are confident about the growth outlook of their companies, a higher percentage than their global counterparts, a survey from KPMG showed on Tuesday.

KPMG's survey, which gathered responses from 1,261 CEOs worldwide, including 125 from China, revealed that over the next three years, two-thirds of China CEOs are predicting growth of 2 percent or more, while over the next year, 97 percent plan to increase their headcount, both ahead of their global peers.

"China's restructuring process and increasingly sophisticated consumers are leading to both challenges and opportunities, and CEOs are responding to this by embracing technological disruption to innovate their production and distribution models, as well as to create new products," said Benny Liu, chairman of KPMG China.

"Focusing on innovation－including new products or services and ways of doing business"－was selected by most Chinese CEOs as a high-priority growth initiative over the next three years (64 percent)."

Other top growth initiatives are "increasing penetration in existing markets" (62 percent) and "penetrating new verticals" (47 percent).

Rather than focusing on mergers and acquisitions, China CEOs are planning to deliver on these growth initiatives by scaling up their own business operations and processes (60 percent), entering into collaborative partnerships/joint ventures (39 percent) and undertaking large-scale business model transformations (35 percent).

Compared with last year, more China CEOs (65 percent in 2017 compared to 52 percent in 2016) expect their companies to be transformed into a significantly different entity over the next three years, driven by adopting new technologies, new business and operating models, and adopting new processes.

"Given the importance of 'innovation' as a growth initiative, it is not surprising that the majority of China CEOs are also looking to transform their business models through innovation and customer-focused transformation," said Vaughn Barber, global chair of KPMG's Global China Practice.

In looking at their investment plans over the next three years, the majority of China CEOs indicated that they will maintain a high level of investment in areas such as cybersecurity, digital infrastructure, emerging technologies, workforce training and innovation including new products, services, ways of doing business, mainly driven by a desire to transform their business and operating models, improve bottom-line growth, and improve customer engagement.

In addition, the survey found that more CEOs from the US and Europe are prioritizing their own domestic economies for growth, whereas CEOs from Asia－including China－seem to be more interested in international markets.

Among the 10 "core countries" in the survey, China CEOs are prioritizing Australia, Germany and the United Kingdom in the overseas market for new growth opportunities, whereas the top three regions are Asia-Pacific, Central and South America, and Central Asia.