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Reducing overhead costs is the #1 way Asia's CEOs are looking to drive revenue growth

Reducing overhead costs is the #1 way Asia's CEOs are looking to drive revenue growth

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Developing new products and services is a close second on the list of priorities for Asia CEOs surveyed.

Every business is looking for new growth avenues. Globally, 23% of the 224 CEOs surveyed expect that their companies will invest in technology and innovation as a strategy to pursue revenue growth, edging out new product or service development (20%), expansion into new sectors (17%), and entry into new countries and regions (16%).

On a regional level, however, the data varies in specific priorities.

In Asia, where 13% of the respondents were based, CEOs are prioritising the following drivers of revenue growth over the next three years:

  • Reduce overhead costs - 30%
  • New product or service development - 27%
  • Investment in technology and innovation - 23%

In the Gulf, where 33% of the respondents were based, CEOs are prioritising the following drivers of revenue growth over the next three years:

  • Investment in technology and innovation - 28%
  • New product or service development - 16%
  • Expansion into new countries or regions - 16%

In Africa, where 31% of the respondents were based, CEOs are prioritising the following drivers of revenue growth over the next three years:

  • Investment in technology and innovation - 28%
  • New product or service development - 21%
  • Expansion into new sector(s) - 20%

In Latin America and the Caribbean, where 22% of the respondents were based, CEOs are prioritising the following drivers of revenue growth over the next three years:

  • Expansion into new countries or regions - 20%
  • Expansion into new sector(s) - 20%
  • New product or service development - 20%

This data has been pulled from the new report by Oxford Business Group (OBG) titled Future Focused: What CEOs see on the Horizon for Emerging Markets in 2023

The most cited business challenges

On a global level, CEOs are worried about the following external factors impacting the business environment in the short term:

  • Commodity price fluctuations - 34%
  • Exchange rate volatility - 22%
  • Supply chain disruption - 18%
  • Changes in demand from top trade partners - 10%
  • Regional conflict - 9%
  • Climate change - 1%
  • Others - 6%

Breaking down the numbers by market, CEOs in Asia have highlighted concerns about supply chain disruptions (30%), CEOs in Africa have cited exchange rate volatility (42.3%), while CEOs in LatAm & Caribbean as well as the Gulf have noted commodity price fluctuations (42.9% and 37.8% respectively). 

For Asia, OBG's Jane Currie noted, the sentiment towards supply chain disruptions may be unsurprising, "given that shipping delays, raw material shortages and factory shutdowns present a salient challenge to a region that is widely known as a global centre for manufacturing and industrial activity".

In terms of attitudes towards regional economic integration, Currie noted Indonesia’s CEOs are generally positive or very positive (50%) about the impact that the Regional Comprehensive Economic Partnership (RCEP) Agreement will have on the market.

The RCEP entered into force for 10 economies – including six Association of South-East Asian Nations members – in January 2022, and became effective for Indonesia one year later. Ratifying the agreement remains a priority for the Senate in the Philippines – the only signatory, aside from Myanmar, yet to confirm – and the country’s CEOs were positive or very positive about its potential impact (56%). One-third of respondents from both economies maintained a neutral stance about the impact of the RCEP at this relatively early stage.

What are CEOs' plans for capital expenditure (CapEx)?

The cost of credit was a natural consideration CEOs about their capital expenditure plans for 2023. Around 40% expect their expenditure to remain the same, 38% see it increasing and 19% decreasing. By region, 45% of CEOs in Africa and the 43% in the Gulf anticipate increasing capital expenditure in the domestic market in the coming year, whereas CEOs in Latin America and the Caribbean, and Asia expect spending to stay the same – at 53% and 50%, respectively – or decline, at 20% and 13%, respectively.

Overall, it seems like high-level executives in the emerging markets surveyed worldwide are adopting a cautious, back-to-basics approach towards growth and expansion in 2023.


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Lead image / OBG and HRO 

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