Growth opportunities and increased spend on research and development (R&D) are key priorities for China’s manufacturing executives, according to an annual KPMG global survey.
The report, titled Competing for growth: How to be a growth leader in industrial manufacturing, surveyed 360 senior executives, including 36 from China, across six industries – aerospace and defence, automotive, conglomerates, medical devices, engineering and industrial products, and metals.
As much as 95 percent of China’s executives indicated growth as a high or extremely high priority in the next two years, compared to just two-thirds in the last 24 months. Over 60 percent of global and China respondents prefer organic growth to achieve their expansion objectives, the survey finds. The survey also notes that a majority of China respondents plan to spend at least 6 percent revenue for R&D to drive business growth.
Alex Shum, Partner, Co-Sector Head of Industrial Manufacturing, KPMG China, says: “China’s government has indicated a renewed focus towards encouraging Overseas Direct Investment (ODI) by Chinese companies and China’s manufacturers are therefore looking for opportunities to use their investments to improve access to new overseas markets.”
According to the survey, up to 94 percent of China’s executives plan to enter new geographic markets in the next 24 months; 89 percent said they intend to enter new sectors.
“Manufacturers have gone from a ‘make in China’ strategy to instead gear up for a ‘sell to China’ strategy’,” notes David Frey, Partner, Markets Strategy, KPMG China. “An existing footprint in or around China is helpful but the reality is that selling to China is not the same as producing there; it takes different skills, capabilities, operating models and sales strategies.”
“While many Western manufacturers are talking about a ‘sell to China’ strategy, it is actually respondents from the emerging markets (India and China in particular) that are most likely to be investing in order to gain access to new markets,” he adds. Forty-four percent of respondents from China and 47 percent of those from India said that gaining access to new markets was the primary reason behind their foreign investments, compared to a global average of 34 percent.
Meanwhile, seven-in-ten of China’s executives surveyed said they feel confident/very confident about the growth prospects of their company, industry or country over the next 12-24 months, compared to around 60 percent globally.
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