Chinese firms take unique path to growth

07 November 2012

BEIJING: Brand owners from China are pursuing different strategies than their overseas counterparts when it comes to areas such as technology adoption and R&D, research by Ernst & Young has found.

The advisory network polled 102 executives about their plans to drive organic growth, and found 46% intended to use new technology to develop products in the next 12 months, falling to 19% across a global survey panel of approximately 1,500 participants.

Similarly, whereas 35% of Chinese companies named tapping new sales channels as a core objective for the coming year, this figure stood at 22% globally.

By contrast, while 12% of operators in the Asian country were keen to change their current mix of products, this total hit 17% internationally. These ratings reached 5% and 26% respectively for achieving ing more rigorous execution.

Such a gap was particularly profound when discussing innovation, as only 2% of Chinese firms expected to increase their focus on R&D, compared with 16% of their peers from other markets.

"Organic growth remains the priority for both Chinese and global respondents," the study argued. "But they are pursuing it in different ways."

Upon identifying their goals for the next year, some 45% of firms will emphasise growth, while 41% try to maintain stability, 13% seek to cut costs and improve efficiency, and 1% hope solely for survival.

Elsewhere, the analysis stated that only 11% of Chinese enterprises anticipated making acquisitions in the coming 12 months, down from 35% in 2011 and 51% in 2010.

"Worries about the global economic situation, scepticism about current asset valuations and concerns about corporate profitability have led to this slide," the study said.

A further 53% of Chinese respondents "lacked confidence" about the availability of viable foreign targets, as did 21% of interviewees across the globe.

The top five preferred destinations for investment among businesses from China included the US, Brazil, Indonesia, India and Japan, the report added.

Data sourced from Ernst & Young; additional content by Warc staff