Chinese firms take new approach

04 April 2012

BEIJING: Innovation and using new technologies are among the main priorities for big companies in China, many of which are seeking to build up their domestic position rather than focusing on exports.

PricewaterhouseCoopers, the services firm, polled 1,258 executives worldwide and 161 in China and Hong Kong. In all, 51% of the latter group said they were "very confident" about their revenue growth prospects for 2012.

Globally, just 40% said the same.

When outlining their objectives for the coming year, 85% of Chinese organisations are planning to enhance in-house innovation capabilities, reflecting the changing trends observable in their home market.

Furthermore, 78% of operators from the Asian nation intend to boost their outlay on technology, a move arguably representing a shift in mentality from "made in China" to "designed in China", PwC said.

"There are still large rooms for improvement on the living standards of most of the Chinese population," Cheung Yun, chairlady of Nine Dragons Paper, added. "We have not yet reached a balance point on this, so this will constitute a strong driving force for future domestic consumption growth."

However, some business leaders also suggested that certain governmental reforms could augment this process by creating favourable conditions stimulating shoppers to raise expenditure levels.

"Social security systems should be implemented in order to make people willing to spend money," Yang Yuanqing, CEO of Lenovo, said. "If the people have sufficient security in terms of medical services, endowment and education, the development of domestic demand may be nurtured more effectively."

Talent management is another key issue, as shown by the fact 59% of contributors thought it is now "more difficult" to hire staff in their industry, and as 54% agreed personnel problems had hampered corporate innovation programmes.

Indeed, 59% of respondents pointed to difficulties concerning identifying and retaining high-potential middle managers, while 43% supported this statement when discussing more senior roles.

"As recently as ten years ago, we were intent on recruiting the best talent from around the entire country," said Sun Mingbo, president and executive director of Tsingtao Brewery.

"But we experienced some setbacks. We hired experienced, talented people and gave them large salaries. But did we retain them? No."

This trend has encouraged 57% of Chinese firms to partner with other companies to overcome shortfalls in staffing and expertise. The same was true for just one third of their counterparts overseas.

Data sourced from PricewaterhouseCoopers; additional content by Warc staff