Asia Pacific CEOs positive on growth, talent questions remain

14 December 2017 4 min. read

Asia Pacific economies are viewed with increased confidence by domestic CEOs, finds a new study. Doubts remain however, as policy uncertainties continue and labour market changes usher in considerable potential for misalignment between social and business outcomes.

The 21 Asia-Pacific Economic Co-operation’s (APEC) economies are showing considerable positive sentiment, a new report by PwC has found. The region, which faces considerable uncertainties from regional development as well as global policy changes, remains likely, according to many CEOs surveyed for the ‘2017 APEC CEO Survey’ report, to be the driver of their businesses' growth going forward.

Sentiment among CEOs continues to recover, following a recent period of decline. The most recent survey notes that around 37% of CEOs are very confident about their organisation’s prospect for revenue growth in their principal economy in the APEC over the next 12 months, up from 28% in the previous survey. While those who say that they are not very confident has decreased by 7 points to 12% of respondents.

CEO sentiment recovering

Respondents also said that they are planning to increase investment in the coming year, with a net 50% planning to increase their global investments – with global companies the more likely to invest. Of this increased investment, the surveyed business leaders indicated that 71% of it would be directed toward APEC 21 economies, with just 29% slated for the rest of the world.

Commenting on the finding, Bob Moritz, PwC's Global Chairman said "Business leaders’ confidence suggests they are not waiting for the fog of uncertainty to clear to push ahead with investment plans. In the short term this will drive momentum for APEC, increasing its global influence and supporting deals activity."

A majority (63%) of respondents also say that they expect their global footprints to expand in the next three years, while around a third (30%) say that their footprints will stay the same. Respondents are increasingly considering strategic alliances (71%) to expand their footprints, as well as a ‘build where we sell’ strategy (51%). The threat from regional multinationals has decreased slightly, falling from 41% to 32%.

Expanding global footprint

In terms of the key areas in which respondents are seeing improvement to sentiment in the APEC area, the launch of new products and services and expansion into the Asia Pacific lead. Areas noted by respondents as indicative of fragile, but improving confidence, include increased margins internationally and increased domestic margins.

On the flip-side, securing talent is increasingly seen as a key area of concern for respondents, with various countries finding it increasingly difficult to attract talent in almost fully-employed employment landscapes. However, additional concerns, particularly in relation to automation increasingly picking off employment, are likely to see the growth of a large number of underemployed or unemployable people – with considerable social and economic uncertainties as a result.

Aside from finding key talent, companies are also increasingly faced with the prospect of layoffs, as new technologies make labour steadily irrelevant to productivity and output. The result of the shift could have a considerable impact on society, which, if poorly executed could lead to precarious consequences.

Growth bottlenecks

The next generation of talent

To combat the rapid shift towards ever more advanced forms of automation, CEOs suggest a mixture of more investment from businesses in upping skills along with various policy initiatives. The number one priority for businesses to reduce their investments’ impact on workers is increased investment in employees’ continuous learning, followed by an increased business investment in apprenticeships and research centres.

Given the structural aspects of companies and shareholder demands, in terms of profit growth at the expense of all other considerations, considerable difficulties may arise without a clear vision for how the future will look in which work may become increasingly scarce, while people continue to have needs and reasonable expectations.

In a growing population, eager young students and graduates of the region will be keenly focussed on and impacted by any potential structural shifts to the workforce, particularly where automation is concerned, which could spur a vocational charge toward the knowledge economy. consulting firms all ranked within the top ten of most desired employers, with PwC leading the way ahead of EYKMPG and Deloitte