Taiwan CEOs upbeat on global growth

By Christine Chou, The China Post

Taiwanese CEOs are surprisingly optimistic about growth. Nearly 40 percent are “very confident” about global growth prospects in 2017, up from last year’s 16 percent and well above the global CEO average of 25 percent, according to PwC’s latest CEO Survey.

Meanwhile, respondents who expect an economic downturn dropped from last year’s 36 percent to 15 percent.

According to PwC, the rise in optimism could help boost investors’ confidence in the market, employment, innovation and opportunities for global market expansion. It would also help Taiwanese companies escape the negative circle of cost-reduction, added analysts. Auditing and consulting firm PwC’s latest annual CEO report was conducted from last November to January, through 1,500 surveys distributed to publicly listed companies across the island and in-depth interviews with 10 corporate leaders. Top Threats for CEOs Though optimistic, Taiwanese CEOs were not blind to potential pitfalls and threats. Uncertain economic growth (74 percent), increasing tax burden (71 percent) and unstable currencies (70 percent) were ranked as the top three threats perceived by CEOs in Taiwan.

“Taiwanese companies are primarily export-oriented, in which case currencies can largely impact revenues. Companies should focus on building greater strength in risk management for volatile currency, on top of making focused efforts to enter supply chains of major corporate giants,” PwC analysts urged. Lotus Pharmaceutical Company (美時化學製藥) Chairman Andrew Lin said that a stronger New Taiwanese Dollar may hurt the profitability of Taiwanese export businesses. “Most Taiwanese businesses pay a lot of attention to currency fluctuations, but even closely monitoring currency cannot rule out the possibility of loss on currency change. The key is to counter risk by using the right methods and discipline,” Lin said. Brain Drain a Serious Challenge for Taiwan: PwC Richard Wu (吳偉臺), PwC’s head of operations for financial services, said Taiwan ranks among the world’s worst cases of brain drain, or human capital flight. “Countries around the world, including Taiwan, are competing for the best international talent,” Wu said. “Taiwan has been trying to attract more foreign professionals to work in the country or for Taiwanese companies. But most overseas acquisition bids have failed due to an inability to adjust to the local culture — and this is an extremely prevalent phenomenon for Taiwanese firms.” Wu said another recipe for failure was that many Taiwanese executives tended to manage their financial and service enterprises with a “manufacturing industry mindset.”

Wu De-fong (吳德豐), PwC Taiwan’s chief officer of strategy and a coordinator of the new CEO report, said that with rapid technological advancements, Taiwan’s small and medium-sized businesses should think more about how to shake off old manufacturing-minded habits and move towards developing a business model suitable for a new knowledge economy.