Asia-Pacific businesses are using the global recession as an opportunity for major changes to their operations, in anticipation of the emergence of new international markets, while many European businesses are still undecided on how to respond to the recession, a new study from KPMG has found.
Figures from "Never catch a falling knife" , a report of research carried out among over 850 senior decision makers from 29 countries on behalf of KPMG's Global Tax practice indicate that nearly 90 percent of businesses in Japan and 84 percent of businesses in Singapore are planning radical changes to their business models in the next decade. In India the figure is 72 percent and in China it is 66 percent.
But among companies in the Czech Republic and the Netherlands, only 20 percent are planning major changes to their businesses, rising to 25 percent in Belgium, 30 percent in Hungary and 42 percent in the UK.
For the 66 percent of Chinese business respondents who are planning major changes to the business strategy, 55 percent of these are looking for a change in their business model and 52 percent are looking to change their products.
Researchers asked business people about their day-to-day experience of the recession, what lessons they are bringing to this recession from their previous experience, and what their plans are for the immediate, and long term future.
Khoonming Ho, KPMG China Tax Partner in charge, Northern China, commented: "It's interesting to note that, based on the survey results, the views of the recession amongst Chinese businesses are very different from those of many in Europe and the U.S. A high proportion of the respondents believe the recession to be unique with nothing in their experience to help them. In China, however, only four percent said the circumstances are unprecedented."
The survey also revealed that in Europe, many companies are relying on government action to renew their economies, particularly through better regulation of the financial sector.
For China, suggestions and opinions on appropriate government action range from cutting taxes (16 percent), encouraging consumer spending (14 percent) and boosting spending on infrastructure projects (12 percent). But there is a significant group (12 percent) which believes that the government has done enough and should step back from further intervention.
But among the Japanese no one took this view, and in Singapore it was chosen by only eight percent of respondents. The preferred option in these countries is to reduce costs, with the Japanese focusing on better risk management and planning, and many companies from Singapore choosing to ride out the recession through looking after their customers.
Mr Ho added: "China's economy, which cannot be decoupled from the global economy, is seen as more resilient. A number of analysts have increased their growth forecasts for China for 2009. In addition, China's stimulus program brings a positive impact to creating a sustained growth."
Nearly half of the China respondents (44 percent) cited they are planning short term changes in strategy, with the primary driver being industry consolidation (41 percent), rather than the changes in customer behaviour quoted by many businesses elsewhere in the world. The main aims of change are to cut costs and optimise business processes, but there is a clear reluctance to lose people.
"Clearly there are companies in Europe planning to adapt to new markets, but the difference in approaches between some European countries and those in the Asia Pacific region is marked," said Mr Ho. "Several of the people we spoke to in India, China and Singapore saw today's problems as nothing new. They simply believe these issues are part of the regular process of renewal and reorganisation that characterises long term economic development."
One area on which there was a broad consensus is when the world economy will begin to recover. Just over half of companies polled expect a recovery in 2010, with 22 percent saying 2011 and seven percent saying 2012. Only a very pessimistic one percent thought we would still be in recession in 2014.
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