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Enoch Yiu

A majority of chief executives of mainland Chinese companies believe technological changes will “weaken” or “eliminate” some market leaders, but they also see such disruption as providing new opportunities, according to a KPMG survey released at the World Economic Forum in Dalian on Tuesday.
Eight out of 10 chief executives of China-headquartered companies expect there will be major disruption in their industries due to technology changes.
More than half believe that some of the traditional leaders in their sectors will be “weakened or eliminated by technological disruption”.
Seventy per cent also believe their organisations are struggling to keep pace with the rate of technology disruption and are concerned about whether they are staying up to date with new technologies, the KMPG report said.
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The survey, titled “2017 China CEO Outlook – Disrupt and Grow”, polled 1,261 chief executive’s worldwide, including 125 from China.
“The CEOs I speak with recognise they are operating in a rapidly changing and complex business environment,” Benny Liu, chairman of KPMG China, told a media briefing on the first day of the three-day forum in Dalian which has gathered over 2,000 business and technology leaders from around the world.
“China’s restructuring process and an increasingly sophisticated consumer 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,” Liu added.
In the survey, 44 per cent of Chinese chief executives ranked “emerging technology” as the risk they are most concerned with, in line with the 43 per cent polled in 2016. The survey is conducted annually.
However, three quarters of them view the disruption as an opportunity rather than a threat, with 70 per cent saying they are being more proactive in trying to disrupt the market rather than waiting to be disrupted by new technology.
The CEOs I speak with recognise they are operating in a rapidly changing and complex business environment
Benny Liu, chairman of KPMG China
Chinese chief executives are more positive than their overseas peers, with 90 per cent of the former group confident in the growth outlook for their companies compared with 82 per cent for international, non-Chinese CEOs.
Two thirds of Chinese company bosses believe they can achieve top line growth of 2 per cent or more. They are also in expansion mode with 97 per cent planning to increase headcounts.
Over the next three years, 86 per cent of Chinese chief executives say they will invest in cybersecurity, 83 per cent on digital infrastructure and 73 per cent in emerging technologies.
Focusing on innovation to introduce new products and services is the top priority for 64 per cent of Chinese CEOs while 62 per cent believe they need to increase the market share of their existing products and services.
China closes gap with US in hi-tech breakthroughs, KPMG finds
The survey also showed that most company leaders are not focused on mergers and acquisitions, with only 8 per cent saying they would expand through acquisitions, while 60 per cent prefer organic growth to scale up their business, and 39 per cent see joint ventures with partners as the best way to expand.
“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.
“Changes in China’s regulatory and policy environment are also impacting the trajectory of transformation by Chinese firms.”
Why China is set to spend US$411 billion on 5G mobile networks
Barber said Chinese chief executives are interested in investing internationally, with Australia, Germany and Britain their top choices.
Only 40 per cent of Chinese chief executives focus mainly on the domestic market, compared with 92 per cent of CEOs in the US doing the same, and 86 per cent in Spain.
“Increased concerns about reputational/brand risk may reflect a heightened awareness that having a good reputation and a social licence to operate is important for companies to be successful, particularly when they are investing and operating in markets outside China,” Barber said.


Chinese CEOs see tech disruption ‘eliminating’ some market leaders, KPMG survey finds

scmp

Benny Liu,(left) KPMG China Chairman and Vaughn Barber, (right) Global Chair, KPMG's Global China Practice unviled KPMG CEO survey at World Economic Forum in Dalian on June 27, 2017. 27JUN17 SCMP / Enoch Yiu

Focusing on innovation to introduce new products and services is the top priority for when it comes to growth initiatives, with 64 per cent of Chinese chief executives. Photo: Bloomberg