19th April 2021 – PwC shared the main insights of the 24th PwC Global CEO Research Report at the Boao Forum for Asia 2021 annual meeting today. According to the report, one year after COVID-19 was declared a pandemic, CEOs are voicing record levels of optimism in the global economic recovery, with 76% of global business leaders predicting that economic growth will improve in 2021, and the majority (71%) of Mainland Chinese CEOs expect global growth to improve.

“COVID-19 has had a major impact on the world’s economy, but global business leaders believe that the rapid development and deployment of vaccines in many parts of the world will support economic growth. In the past year, CEOs have constantly adjusted their business strategies in this rapidly changing environment to meet the challenges presented by the epidemic. They need to think in different ways and constantly assess their decisions and actions based on their broader social impact, so as to build trust and deliver sustained results to stakeholders,” said Thomas Leung, Managing Partner, Markets, PwC China.

CEO confidence in revenue growth rebounds to the long-term average

CEOs are more optimistic about the outlook for their businesses. Some 36% of those polled said they are “very confident” about their organisation’s prospects for revenue growth over the next 12 months, up from 27% of CEOs in 2020.

While global confidence is up, there is wide variation across industries, reflecting the varying degrees to which consumer behaviour has been impacted by the pandemic. CEOs in the technology and telecommunications sectors show the highest levels of confidence at 45% and 43%, respectively. Meanwhile, CEOs in the transportation and logistics (29%) and hospitality and leisure (27%) sectors are among the least confident about their ability to grow revenues over the next 12 months.

31% of Mainland Chinese CEOs are “very confident” in their company’s prospects for revenue growth over a 12-month timeframe (2020: 45%). A higher proportion (49%) feel this way for a three-year period (2020: 55%). This sentiment is being supported by favourable policy measures that will help to boost economic activity in the medium-term.

Worries about cyber, tax policies and misinformation on the rise

Not surprisingly, pandemics and health crises1 top the list of threats to growth prospects, overtaking the fear of over-regulation, which has been the perennial number one concern for CEOs globally since 2014.

Cyber has fast become a major source of anxiety, and is now the second highest concern among CEOs—topped only by pandemics. It was selected as an extreme concern by 47% of CEOs, compared with 33% in 2020. Also of greater concern this year is misinformation (28% are ‘extremely concerned,’ up from 16% in 2020). The rise of these two threats coincides with nearly half of CEOs’ plans to increase their investments in digital transformation by 10% or more.

Pandemics, trade tensions and availability of key skills are the top three threats that executives in China are factoring into their strategic risk management activities.

The climate change challenge

Last year, 24% of CEOs selected climate change as an extreme concern; this year, it was selected by 30%. This may seem like a notable jump, but in the context of rising anxiety about nearly all threats, it represents just a marginal increase. What’s more, 27% of CEOs report not being concerned about climate change; and 60% of CEOs have not factored it into their strategic risk management activities.

Digital investments for the future

Asked about their spending on digital transformation, nearly half of CEOs (49%) project increases of 10% or more. Despite the rising level of concern CEOs are voicing about cyberattacks, this has not translated into definitive actions. Less than half of the CEOs planning for heightened digital investment are also planning to boost their spending on cybersecurity and data privacy by 10% or more.

At the same time, a growing number of CEOs – 36% – plan to use automation and technology to make their workforce more competitive, more than double the share of CEOs who said the same in 2016.

Chinese executives turn to Japan, Germany and USA for overseas growth opportunities

The three countries (apart from China) that Mainland Chinese CEOs consider as most important to their organisation’s overall growth prospects over the next 12 months are include Japan (33%), Germany and the US (31%).

CEOs based in Hong Kong view Mainland China (69%), the US (36%) as well as India, Indonesia and Japan (14%) as the main markets that are important for their overall growth prospects, while executives globally still prioritise the US (35%), Mainland China (28%) and Germany (17%).

Cross-border investment of firms in China is being directed to Asia-Pacific, Belt and Road countries and the European Union

When asked about the regions that are CEOs’ priority for outbound investments, firms in China opted for Asia Pacific (65%), countries along the Belt and Road (57%) followed by EU (49%).

Hong Kong CEOs on the other hand targeted the Asia Pacific region (68%) and ASEAN countries more specifically (37%).

“2020 was an extraordinary year. Due to the great success of its anti-epidemic measures, China has taken the lead in a V-shaped rebound in its economic growth, it’s the only country among the world’s major economies with positive growth. China’s GDP growth rate reached 18.3% in the first quarter of this year. This perfect start shows that China’s economy has returned to the right track. A series of stimulus policies implemented by the Chinese government to help enterprises cope with the challenges brought by the epidemic have achieved initial results. At the same time, Chinese enterprises are actively using government measures to promote growth and to flexibly respond to a changing market environment,” said James Chang, Consulting Leader, PwC China.