APEC CEO Summit:
Port Moresby, Papua New Guinea, 15-17 November 2018
Resilience and digital readiness in a trade-disrupted worldPwC’s 2018 APEC CEO Survey China Report
PwC |
About PwC’s APEC CEO Survey
www.pwccn.com/en/research-and-insights/apec-china-2018.html 2
All 21 APEC
economies represented
85% of respondents
Are key decision makers
37% in businesses with at least
$US1 billion revenue
PwC |
• Official release on 15 November at the APEC CEO Summit 2018
• Online survey completed between 10 May to 16 July
• Survey conducted for the 9th time
• Produced by PwC as Knowledge Partner
“
PwC | 3
• The global trade environment is in a state of flux.
• The prevailing trade rules were being challenged and old business models were being displaced by new thinking.
• Despite all the economic jitters, Chinese companies at large have quickly reassessed the situation and demonstrated resilience in coping with the new host of challenges.
• This year we rescanned the environment to test the validity of the trade rhetoric and what has really changed in the minds of business leaders.
“Introduction
PwC | www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC |
2013 2014 2015 2016 2017 2018
50%
40%
30%
20%
10%
0%
Business confidence and investment subdued by strong trade headwinds
4
2018 APEC CEO Survey – China report
China - Very confident APEC - Very confident
China - Not very confident APEC - Not very confident
Key measures of Chinese executive optimism showing responses for “very confident” on future revenue growth
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC |
Business confidence hinges on the perceived condition of global trade environment
5
2018 APEC CEO Survey – China report
0%
10%
20%
30%
40%
An increase in
revenue opportunities
due to a new bilateral
trade arrangement
A loss in revenue
due to a stalled or
collapsed trade
arrangement
An increase in barriers
to moving goods
across borders
An increase in barriers
to providing or
receiving services
across borders
An increase in barriers
to investing in another
economy (constraints
on FDI, M&A)
APECChina
Percentage of Chinese executives who expect to experience the following in the global trade environment in the next 12 months
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC | 6
While global investment is dented, Chinese firms are resilient to disruption by resetting their investment footprints in APEC
2018 APEC CEO Survey – China report
Future investment intent Future investment allocation to APEC and
rest of the world
51%
Stay the same
46%
Increase
3%
Decrease
25%
Rest of the word
75%
APEC
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC |
39%
44%
44%
45%
46%
36%
44%
45%
46%
47%
7
Top APEC economies to receive increased cross border investment over the next 12 months (net increase)
Viet Nam
People's Republic of China
The United States
Australia
Thailand
2018
Viet Nam
People’s Republic of China
Indonesia
The United States
Thailand
2017
China maintained its second ranking as the most attractive destination for planned increases in cross-border investments
2018 APEC CEO Survey – China report
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC | 8
Government initiatives unveiled new growth opportunities2018 APEC CEO Survey – China report
0%
10%
20%
30%
40%
50%
60%
Riskassessment
CommercialViability
assessment
M&As Increase frequency of review of our organisation’s strategies and operations to
increase alignment
Prioritise making
greater use of data and IP assets
Develop new products and
services
Identify localPartners for risk sharing
Focus onBuildingbrand
RaiseInvestments in new and emerging
technologies
Don’t’ know
ChinaAPEC
Activities Chinese firms plan to undertake over the next 2 years to capitalise on initiatives by Chinese government
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC | 9
Chinese executives perceive strong competition in developing digital maturity
In line with our competitorsFall behind our competitors Highly competitive
0% 20% 40% 60% 80% 100%
Managing data risks
0%20%40%60%80%100%
Skills and development
of workforce
Operations
Data infrastructure
Digital customer
interactions
Development of digital
products
ChinaAPEC
How Chinese firms assess their digital capabilities against the competition
2018 APEC CEO Survey – China report
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC |
Majority of Chinese CEOs believe the government should do more to train on STEM
Believe their government
should do more to train STEM
professionals
10
Believe their government
is doing enough to train STEM
professionals
61%
8%
2018 APEC CEO Survey – China report
PwC | 11
Chinese companies are reprioritising investments to drive digital capabilities
7%
33%
41%
15%
Highly
competitive
In line with
our
competitors
Not making
use of AI
technologies
Fallen
behind our
competitors
Priority areas to improve for China to further advance in the
digital economySelf-assessed performance in building artificial intelligence into
products over the last two years
2018 APEC CEO Survey – China report
Raising standards for data and privacy protections
Availability of digital ready talent
Improvement to digital infrastructure
Reducing barriers to foreign entrants
Developing the digital business sector
More people participating in the digital economy
Investments in cyber defences, public and private
1
2
3
4
5
6
7
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC | 12
CEOs see supportive factors across APEC for fast-growth start-up success beyond the US and ChinaName an economy with the right conditions to spark the next unicorn start-up, beyond the US and China
31%
28%28%
24%23%
Republic of Korea
21%
CanadaAustralia
Hong Kong, China Japan
Singapore
PwC |
Hong Kong as an
ecosystem to spur
the next wave of
unicorn growth
2018 APEC CEO Survey – China report
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC | 13
Business models need to keep pace with data transfer regulations
(APEC Overall: 20%) perceived an increase
in barriers to moving data across borders in
the next 12 months, when conducting their
cross-border business activities.
28%
2018 APEC CEO Survey – China report
PwC | 14
0 5 10 15 20 25 30 35 40
Emerging tech is set to create more jobs than displaced, although filling them with the right talent remains a challenge
9%
13%
19%
30%
34%
31%
22%
17%
7%
14%
We are reducing headcount
No change to headcount BUT
substantial changes to our
employees' roles
No change to headcount and minimal
change to our employees' roles
We are creating more jobs BUT
struggling to fill the roles with the
people/skills we need
We are creating more jobs and filling
them successfully
ChinaAPEC
2018 APEC CEO Survey – China report
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC | 15
10th
Expanded worker protections
Raising minimum wages
Expanded access to high-quality education at all levels
Expanded access to healthcare
Greater economic incentives for savings and access to financial service
No contribution Strong/moderate contribution
Infrastructure
81%
68%
64%
58%
56%
57%
53%
50%
74%
71%
16%
22%
25%
25%
27%
34%
37%
36%
39%
43%
Services
Progress in education and transportation are pivotal to advancing inclusive growth
Improved transport
More affordable high-speed internet access
More reliable access to power and electricity
Improved access to water and sanitation
More stable food prices
2018 APEC CEO Survey – China report
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC |
For policy makers:
• The trade debate has prompted China to revisit its international relations and economic ties within and beyond APEC.
• Growing the domestic market is a long-term remedy to trade protectionism. Policy makers should buy time to deepen structural reforms to stimulate aggregate demand
• Government support is the key determinant in driving forward the digital agenda for the private sector.
16
For business leaders:
• Businesses must be alert to their vulnerability in the global value chain and prioritise resources to accelerate the pace of industrial upgrading.
• Digital transformation and adoption of emerging technologies are crucial to driving competiveness in businesses, so is the speed at which digitisation is taking place.
• Domestic businesses are encouraged to venture outward for growth opportunities arising from new bilateral and multilateral agreements, and capitalise on government led initiatives
What are the key implications?2018 APEC CEO Survey – China report
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC | 17
Gender
22%20%
56%
US$2.5 bn or moreUS$500 m < US$2.5bn< US$500 m
Revenue
15%
85%
Head of department or business unitExecutive at the highest decision-making level
Principal role
Sector
FSIndustrial Consumer OtherTech
39%29% 21%21% 17%21% 8%
Professional Services
12% 9%116% 84%
Profile of survey respondents in China2018 APEC CEO Survey – China report
www.pwccn.com/en/research-and-insights/apec-china-2018.html
PwC | 18
We surveyed industry leaders from 10 May to 16 July 2018 for PwC’s 2018 APEC CEO Survey.
We used an online and paper methodology to achieve 1,189 valid responses from CEOs and industry leaders,
with responses scored from each of the 21 APEC economies. The 21 APEC member economies are:
Australia, Brunei Darussalam, Canada, Chile, People's Republic of China; Hong Kong, China; Indonesia,
Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, The Philippines,
Russia, Singapore, Chinese Taipei, Thailand, The United States and Viet Nam.
This multilingual survey was made available in six languages: English, Simplified Chinese, Vietnamese,
Japanese, Korean and Spanish.
Responses to the survey were given on a confidential and unattributable basis.
Note: Not all figures add up to 100% due to rounding.
Methodology2018 APEC CEO Survey – China report
www.pwccn.com/en/research-and-insights/apec-china-2018.html
Contact us
Frank LynChina and Hong Kong Markets [email protected]
www.pwc.com/APEC
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