China report

China has embarked on structural reforms with adjustments to the economic model which is expected to be more rational. Indeed, the government hopes to shift the economic foundation to robust personal consumption and the services sector as the previous model led to environmental issues and concerns over use of excessive debt financing. Developing free trade zones, reforming state-owned enterprises and building the country’s social safety net (e.g., pension reform), among other measures, will ensure that China remains the locomotive of global economic growth during this critical transition.

The course corrections in China, coupled with uncertainties at the global level driven by falling oil and commodity prices, tighter monetary policy in the US and continued quantitative easing by the European Central Bank (ECB) and Bank of Japan (BOJ) are making investors wary of managing an increasing portfolio of risks, while searching for high-yield prospects. China’s reforms are necessary to build a steadier and stronger economy, and there are plenty of new opportunities.

The 19th Annual Global CEO Survey was conducted between September and December 2015 and interviewed over 1,400 executives from 83 countries and a range of sectors. This is the China report which presents the views of 145 executives based in China and Hong Kong.

of business leaders in China believe the world is moving towards "multiple belief and value systems" as opposed to common global beliefs and value systems

Moving beyond globalisation

Today’s CEOs face a business environment that’s becoming increasingly complicated to read and adapt to. This complicated world picture isn’t just being shaped by economic and geopolitical trends. We believe there is a more fundamental shift taking place, namely from a globalising world to one with many dimensions of power, growth and threats.

of executives in China are actively making changes in how they define and manage risks in responding to changing stakeholder expectations

Addressing greater expectations

CEOs acknowledge that their customers as well as other stakeholders increasingly want them to do more to tackle important problems. The response for many has been to focus even more strongly on customer needs as well as drawing on their companies’ own sense of purpose – what they stand for – to define a more comprehensive view of how their businesses operate within society. Some CEOs are taking concrete steps to align this broader mission to their company’s core goal of profitability.

of executives in China are using technology to deliver on wider stakeholder expectations

Transforming: technology, innovation and talent

CEOs are using technology to get closer to consumers but are being challenged to align all parts of their operating model behind customer strategies. Some companies are bridging what we call an ‘execution gap’ by shaping their entire value proposition, strategy, operations and capabilities tightly around a strong commitment to what they stand for. They’re also looking to build better innovation and people capabilities to address changing customer expectations.

of executives in China said in five years’ time “reporting on both financial and non-financial matters” would be one of the distinctive attributes of successful organisations

Measuring and communicating success

CEOs are seeking to better measure the impact and value of innovation and key risks for stakeholders. Companies are addressing these challenges through a greater focus on data and technology to gain better insight into business processes and to measure a broader range of variables. They’re also looking to communicate a range of ‘softer’ issues in a reliable and consistent way across multiple channels.