With fears of global uncertainty and a China slowdown, Chinese CEO are rethinking their business strategies and looking for new ways to sustain their businesses. According to KPMG’s 2016 China CEO Outlook report, 47% of Chinese business leaders saw fostering innovation as one of the top three strategic factors for their companies over the next several years.  A relatively high level compared to 23% for CEO respondents elsewhere in the world. In addition, the report also discovered that 29% of Chinese CEOs said they would want to focus more on the needs of their clients.

 

The need for Chinese business leaders to reevaluate their products and services is driven partly by the government’s push to transform China’s economy from one led by consumption rather than exports. China’s 13th Five-Year plan meeting earlier this year in fact citied continued innovation as one of the key factors to drive the economy forward. “Innovation is the primary driving force for development and must occupy a central place in China's development strategy,” said Chinese Premier Li Keqiang during a parliamentary speech.

 

 

“In a rapidly evolving and vibrant market like China, CEOs need to think about innovating and adapting their business models to ensure their products and services are attractive to a growing consumer market,” explains Honson To, co-chairman at KPMG China.  

 

Survey results also show that half of Chinese respondents saw “new products” as the primary source of growth over the next three years. Ren Zhengfei founder and president of Huawei Technologies for example forged a partnership with top optics/camera manufacturer Leica in creating a smartphone with a professional camera.

 

The innovation sentiment arising from this year’s Five-Year Plan meeting has also spilled over to Hong Kong companies, who like mainland Chinese companies are preparing for the future. Findings from American Express’ “Roadmap to 2020” report reveals that Hong Kong mid-sized companies were slowly preparing their strategy for innovation. In 2015, 80% of surveyed companies had no formal plan for innovation, in 2016 that number reduced to 69%.

 

“Companies are very astute and are actually seeing the challenges they have to face. They are also leveraging a lot on data to get insights,” explains Stephen Pendergast, vice president and general manager Hong Kong & Taiwan global corporate payments at American Express. “Two-thirds of companies [surveyed] have a clear understanding of the Chinese 13th Five-Year Plan. Mid-sized companies are engaged in the local economy.”