The recent news headlines around political outcomes in the US (Trump's win) and UK (Brexit) are a reflection of the anxieties that globalization and the prevailing economic systems might not have worked for everyone.
Globalization has brought many benefits from connectivity to trade and capital mobility but also downsides. President Xi Jinping delivered a robust defence of globalization and technological progress. He said that China has not only been a beneficiary of globalization but has also contributed to inclusive growth through its poverty alleviation. While acknowledging the flaws of globalization, President Xi said that "we should adapt to and guide economic globalization, cushion its negative impact, and deliver its benefits to all countries and all nations".
This is the China report which presents the views of 182 executives based in mainland China and Hong Kong. For the purposes of this report, "China" refers to the People's Republic of China, including Hong Kong survey respondents. Where there is statistically significant difference in the survey results between Hong Kong and mainland China, results are presented separately. The survey built around the theme Technology, Globalisation and the CEO was conducted between September and December 2016. We interviewed over 1,300 executives from 79 countries across a range of industries.
Business outlook
Figure 1 Percentage of CEOs who are confident about revenue growth prospects in the short-term and long-term
Figure 2 Percentage of CEOs who stated that outlook of global economy will improve over the next 12 months (by region)
The Chinese economy continues to undergo complex structural reforms to ensure balanced and steady development and growth. Business outlook for executives in China appears quite positive, as the survey results found that there has been an appreciable increase in the proportion of executives who are "very confident" about their companies' prospects for revenue growth whether in the next 12 months or over the next 3 years. For the 12 month timeframe, survey found that 33% of executives in China are "very confident" in their companies' prospects for revenue growth compared to one year ago when 25% stated the same and compared to two years ago when 36% said they were "very confident" in their outlook for 2015
As far as CEOs' outlook of the global economy over the next 12 months is concerned, the proportion of respondents in China who stated that the outlook would improve remained at 31% but it was more positive than their peers in other parts of the world.
Globally, 29% of executives stated that global economic growth over the next 12 months would improve compared to 27% in 2016 and 37% in 2015.
Figure 3 Most attractive cities for growth prospects over the next 12 months ranked by CEOs in China
In terms of going global to seek investment opportunities and growth prospects for their companies over the next 12 months, the ranking of attractiveness of countries by CEOs in mainland China is different from those in Hong Kong. For example, in mainland China the three economies (apart from their own) that CEOs consider as being most important to their organisations' overall growth prospects over the next 12 months are the US (58%), followed by Hong Kong (30%) and Germany (22%). In Hong Kong, the three economies (apart from their own) that CEOs consider as being most important to their organisation's overall growth prospects over the next 12 months are China (73%), followed by the US (56%) and UK (19%).
CEOs in other parts of the world ranked the US (43%), China (33%) and Germany (17%) as having the most growth opportunities for their companies.
Figure 4 Top strategies to drive corporate growth or the profitability in the next two months
Figure 5 Top areas to strengthen in order to capitalize on new business opportunities
Figure 6 Top business threats to organization's growth prospects
The right talent for the digital age
Data from the International Labour Organization (ILO) shows that the labour force participation rate1 for males declined from 83% to 70% between 2000 and 2017. Also, the projections from ILO show that China's labour force (aged 15-64) is expected to decline between now and 2050. In addition to the projected shortfall of labour, China's labour market is facing a mismatch of skills demand and supply. Unemployment is evident among college graduates and migrant workers but at the same time companies are finding it hard to recruit people. Almost 7 million college graduates entered the job market in 2015, and records from the Ministry of Human Resources and Social Security show that unemployment rate of college students stood at 9.3%, higher than the country's average of 4%. Steel mills, coal mines and shipping companies are also laying off their staff as a result of sagging economy, leaving many migrant workers returning home jobless. Why are companies finding it challenging to hire staff even when there is an abundance of job seekers in the market?
Figure 7 China's labor market is facing a mismatch of skills demand and supply
59% of executives in China expect to increase their headcount in the next 12 months while85% are worried about the availability of key skills. And the figure below shows Proportion of executives in China who find it difficult to recruit people with skills
Figure 8 Proportion of executives in China who are adjusting their talent strategies to satisfy hiring needs
Meeting the future talent gap
Executives in China recognize the challenges of recruiting the right skills; many, according to PWC survey also foresee structural changes in the workforce in the next 20 years due to the extensive development of robotics, big data and eventually artificial intelligence (AI). Executives recognize the need to adjust their talent strategy that not only bridges the existing talent gap, but will also be fit for future growth.
Figure 9 Proportion of executives who are rethinking HR functions and employment structures of the future where man and machine can work together
Conclusion
Globalization does affect China in a way. However China is taking action to maintain the economic growth such as laying out some policies related to the foreign investment to boost the national economy. This CEO survey report comes from PWC which comprehensively reveals that China could be the main stage for market entry. Moreover CEOs emphasize the recent problem about talent gap which can be solved by man and machine work together and it could be a long way to go. Yet finding an agency can be one of the best ways to narrow the talent gap. Talent Spot can help you with your HR solutions in China as well as Asia Pacific Region includes Singapore, Hong Kong, Taiwan, Japan, Korea, Thailand and Vietnam.
