Business leaders in the Greater China region were already grappling with heightened trade volatility, talent shortages, rapid technology advances and the ever-changing behaviours of consumers. Covid-19 pushed much of that to the sidelines but overcoming these challenges is still fundamental to business success.
The Economist Intelligence Unit has released a first of its kind survey on managing business uncertainty in the Greater China region. As the health and economic impacts of the COVID-19 crisis continue to disrupt business as usual, the pandemic may divert attention away from other longer-standing sources of uncertainty.
The report, The art of managing business uncertainty: A future of work-study for Greater China, demonstrates that, if anything, the crisis has added fuel to existing trends, rather than freezing them in place.
While some businesses seem prepared to ride out the current crisis, making as few changes as possible, survey results suggest many others will make significant shifts to their structure. About 70% of business executives surveyed said the level of uncertainty they’re experiencing today is higher than at any other time in their careers. To cope with that, cost-cutting, headcount reduction and consolidation of work locations are some measures being taken. But more telling for the future are changes business are making to improve agility and scalability. Research shows greater use of temporary workers, more home- and mobile-working, a concerted push to automate more front- and back-office operations, and increased investment in AI, IoT and work-from-anywhere technologies. Businesses are reacting to long-standing forces in the business world; COVID-19, in many cases, is accelerating change for Greater China.
Over March and April 2020, The Economist Intelligence Unit surveyed 315 senior executives from around the Greater China region, including Hong Kong, Macao, Mainland China, and Taiwan.
Most industries in Greater China have been hit hard by the crisis, but some have fared better than others. Their different experiences might explain the stark contrast in executive outlooks across the four largest industries surveyed. Expectations for the next 12 months in the technology sector were most optimistic, particularly when it comes to revenue growth, about 94% of tech executives expressed confidence. Conversely, retailers will see struggle; only 19% said they see business conditions improving.
Keeping with findings from other research that shows China’s second-tier cities are experiencing rapid growth, much of the optimism in this new survey came from respondents in those types of classified locations; 62% of executives in second-tier cities had expectations of improving business conditions, versus 49% in top tier cities or 8% in the Greater Bay Area (GBA). The average overall expectations for improving business conditions in the survey was 39%; only 19% expected worse terms with the rest seeing no significant change.
As the term “business uncertainty” in the title suggests, we were not sure what we would find when we asked executives in the region about the challenges they face today. Given current conditions, businesses were obviously primarily concerned about natural disasters and pandemics, which took the top spot in terms of worries” – Jason Wincuinas, senior editor of The Economist Intelligence Unit, and editor of the report said. – „But they have not been distracted from the challenges that have been building over the past decade. China is a massive and diverse market so having the scale and flexibility to succeed in it is paramount. It turns out, the same kind of agility needed to succeed in a rapidly advancing market is also important to surviving a crisis like covid 19. For example, if a company was already looking at technological solutions to Tallent challenges, that probably helped a transition to work-from-anywhere tactics that have proved essential for companies to maintain productivity during lockdowns. That kind of scalability and fluidity of staffing will probably become a permanent feature of work.”
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