Chief executive officers have less confidence in growth prospects for their businesses amid China's economic restructuring, even as most of them continued to remain bullish on the size and strength of the Chinese economy, a survey said on Tuesday.
The survey, conducted by global consulting firm PricewaterhouseCoopers, was based on responses from 136 CEOs in the Chinese mainland from October to December 2014.
Thirty-six percent of the respondents remained "very confident" on their company's growth prospects in the next 12 months, down 11 percentage points from the previous year. Confidence in long-term growth has dropped as well, and sits below the global average.
"Such an outlook is somewhat understandable given the ongoing structural rebalancing of China's economy, which continues to slow growth to a level referred to as the 'new normal' by the country's leadership," said David Wu, the Beijing-based senior partner of PwC China.
China's economy "has entered a period of medium-to-high growth from high growth, a shift from quantity to quality as well as from speed to efficiency in terms of development".
Wu said the "new normal" situation is more complicated than it appears, as it cannot be completed within three to five years. Therefore, the government should come out with steady policies, encourage innovation and streamline administrative procedures to boost confidence among the CEOs.
The report said despite these challenges, almost three-quarters (71 percent) said there are more growth opportunities for their companies now than there were three years ago. And more than half (57 percent) were planning to increase headcount over the next 12 months.
"Even though the country recorded its lowest annual growth in 24 years of 7.4 percent in 2014, this was still within the government's target range and is the envy of many countries," said Wu.
The report said the CEOs regard availability of key skills (90 percent) and new market entrants (90 percent) as the biggest challenges, followed by the speed of technological change, increasing tax burdens and shift in consumer spending and behavior. Their level of concern is higher than it was last year and higher than that of their global peers.
About eight in 10 CEOs in China said rising competition and shifts in customer behavior would be the most disruptive trends for the industry over the next five years. China's unique demographic and technological changes have given rise to new consumer demands, increasing the need for organizations to differentiate themselves from rivals.
Many CEOs recognized the significance of digital technology in their businesses, but others were less clear about how to derive value from them. Only 67 percent said they have a clear vision of how technology can help achieve competitive advantage, which was a relatively lower percentage compared with that of the global average of 86 percent and the 92 percent in the United States.
