A recent survey shows that although many Asia-Pacific CEOs are not confident about their company’s long-term viability, they have taken steps towards business reinvention.
According to PwC’s 27th Annual Global CEO Survey released this January, uncertainty continues to occupy the mindspace of CEOs across the globe. In Asia Pacific, CEOs have highly divergent views about the global economy: 45% expect it to decline, while 40% believe it will improve in 2024. Some 97% of them are already taking some steps towards reinventing the business. The reinvention efforts have reached a certain degree of success: CEOs in the region feel less exposed to short-term risks including macroeconomic volatility (down 9% from a year ago), inflation (down 21%) and geopolitical tensions (down 12%). However, the confidence is fragile. Some 63% remain uncertain about their company's viability, which is 10% higher than a year ago, and 18% above the average for global CEOs.
Asia-Pacific CEOs are aware that they need to address global megatrends including climate change and technological disruption, which are poised to compel further reinvention. To this end, there have been notable advancements in decarbonisation: 68% and 51% are actively enhancing energy efficiency and introducing climate-friendly innovations, respectively.
The biggest barriers to be overcome, according to the Asia-Pacific CEOs, are regulatory complexity (63%), and lower economic returns for climate- friendly investments (61%). And the CEOs appear to have taken these in their stride; 51% have accepted lower returns for climate-friendly investments in the past year, 10% higher than global CEOs.
CEOs in the region see generative AI (GenAI) as a catalyst for reinvention that will power efficiency, innovation and transformational change. Over two-thirds of them foresee substantial impacts of GenAI on their companies, workforce and markets within the next three years.
The report suggests four action steps for CEOs:
“Our CEO survey this year serves as an urgent and powerful call to intensified action towards business reinvention,” says Raymund Chao, PwC Asia Pacific and China Chairman. “Persistent geopolitical conflicts and inflationary worries, among other challenges, have really dug in, amplifying the risks and constraining growth in Asia Pacific. Simultaneously, global megatrends including technological shifts – exemplified by the rise of GenAI, and climate-related issues – are increasingly demanding CEOs’ attention. In a constantly evolving market, businesses must embrace a culture of continuous innovation to not only sustain their competitive edge, but also ensure long-term viability.”
PwC surveyed 4,702 global CEOs, including 1,774 in Asia Pacific, from 2 October through 10 November 2023. The global and regional figures are weighted proportionally to country nominal GDP. The industry and country-level figures are based on unweighted data from the full sample of 4,702 CEOs.
© 2024 Institute of Singapore Chartered Accountants
