Nguyen Xuan Phuc
Prime Minister, Viet Nam
Perspectives from CEOs
of APEC CEOs expect their global footprint to expand over the next three years
to increase business investments in 2018
of increased investments going to 21 APEC economies
automating some functions in their workforce
Over the next three years, Asia Pacific CEOs expect their businesses will become more global and more automated. Watch PwC Global Chairman Bob Moritz’s video for an overview of our 2017 APEC CEO Survey findings launched at the APEC CEO Summit in Da Nang, Viet Nam on 8-10 November 2017.
Prime Minister, Viet Nam
Deputy Prime Minister and Treasurer, Papua New Guinea
Minister of International Trade, Government of Canada
Chairperson, Vinh Hoan Corporation
Senior Vice President and Chief Commercial Officer, GE Digital, Greater China
CEO & General Director, Suntory PepsiCo Vietnam Beverage
Over the next three years, Asia Pacific CEOs expect their businesses will become more global, more automated and more tied to a region that they believe is slowly and steadily becoming more economically cohesive.
After victories of nationalist parties and rhetoric against free trade, we looked for evidence of a pullback from the global economy but found little. APEC CEOs are more optimistic today than during the previous two years — 37% say they are “very confident” of their prospects for revenue growth during the next 12 months. Stronger prospects for GDP growth in some APEC economies and export markets in Europe are bolstering sentiment. International trade flows are picking up, projected to outpace global economic growth in 2017 for the first time in five years, according to the World Trade Organization.
In fact, 63% of regional business leaders surveyed by PwC expect their global footprint to expand over the next three years. A net 50% plan to increase investments globally, up from 43% at the same time last year. Executives are forging ahead despite tremendous uncertainty over trade policy directions.
Yet these business leaders are also prepared to make adjustments in how they operate internationally to adapt to changing views on trade openness. They expect to make greater use of strategic alliances (71%) to secure footholds in foreign markets; some will move to some extent to a ‘build where they sell’ (51%) model, amongst other adaptations.
They will balance an array of incentives — both economic and market-driven — to do more internationally against threats of rising barriers to foreign trade and investment. With governments seeking to protect jobs, and to attract or retain a greater share of business activity, especially R&D, trade relations and tax policies are in flux. Amongst the APEC economies, on average, perceptions are that the conditions for paying business taxes have improved since 2010 while they are volatile for trading across borders, according to the World Bank’s annual Ease of Doing Business ranking of economies against the highest-scoring global economy, or the distance to frontier.
Global strategies will be driven by wider adoptions of technologies, like robotics and 3D printing in manufacturing, as much as any sharp reversal in trade openness. Automation in the workplace is moving at a pace few CEOs could have imagined. With over half of business leaders (58%) currently automating certain functions in their organisations, APEC businesses are laying the groundwork for a future workforce that is more analytical, more intelligence-consuming, and less focused on commoditised tasks.
For the past eight years, in its role as Knowledge Partner to the APEC CEO Summit, PwC has delivered the business perspective on doing business in in the region through its annual APEC CEO Survey. Respondents represent businesses that are investing, on average, in six APEC economies other than in their own principal economy.
This year’s survey shows how business leaders are taking stock of a more fluid trade policy and technology environment. PwC surveyed 1,412 APEC business leaders from May through July 2017. Responses are scored from each of the 21 APEC economies. Over half of respondents are in organisations with over US$1 billion in annual revenue. Please find the full details on PwC’s APEC Survey research methodology.
The findings of this year’s APEC Survey reveal an increasingly complex environment for businesses that operate across borders. Global and regional political currents suggest companies face the uncertainty of tougher trade barriers even as they attempt to increase intra-regional investment and growth. At the same time they must plan for future growth with an operational capability that will be increasingly automated.
Both will impact the way APEC companies have done business for the past 20 years and so they should not expect simple answers to the questions the new trade landscape and automation pose. The depth of integration and specialisations that have grown alongside today’s global supply chains means it’s unlikely there will be an obvious solution.
Here’s what we do know. Over the next five years the APEC workforce will become more automated and the region more closely integrated economically. Despite this integration the combination of trade barriers and automation could mean that worker mobility is restricted and securing talent becomes harder.
Policymakers should expect that businesses will model the impact of trade and tax changes to understand potential company impacts, and continue to reassess supply chain and sourcing for potential border, exchange rate, and price impacts. They have clearly signalled that they intend to maintain or extend global footprints.
To ride out the changes automation will bring, companies need to ask the right questions now in order to plan. How will automation and forms of artificial intelligence like virtual assistants affect your business model? Will these changes open up new markets and opportunities that have seemed off-limits in the past? What type of talent will you need over the next five years and how will you secure it? And how can you build and maintain trust in your business when so much of your business strategies, growth markets and even the makeup of your workforce is in flux?
Above all, for both businesses and policymakers, the challenges can be considered theoretical no longer. It’s time to get practical about helping workers at many different skill levels adjust to working in an automated world.
We are proud to be Knowledge Partner to the APEC CEO Summit 2017. In addition to launching PwC's 2017 APEC CEO Survey results at the Summit, we have also produced two thematic videos played at the Future of Globalisation and Future of Work plenary sessions during the Summit.