Onslaught of Changes in Technology Now Number One Complexity for Asia Pacific Businesses; Widespread Disruption Predicted
- The leading complexity confronting business leaders in Asia Pacific is the need to adopt new technologies within their own company
- Vast majority of businesses (84%) also now expect to be disrupted by competitive technology in the next two years
- Cost pressure and waves of regulation are also seen as key drivers of complexity
- India and China big winners in terms of growing influence; the US is seen as having less
- The majority of businesses see the environment they operate in becoming more complex
Technology, through either disruption or the need for innovation, is the leading complexity facing Asian businesses today, according to a new survey of 150 Asia Pacific-based business leaders by leading global law firm Baker McKenzie and Mergermarket.
Of those surveyed, almost half (44%) of the respondents are either based or do business in Thailand.
In the Asia Pacific Business Complexities Survey 2017, the number one complexity identified by companies across the region was the need to drive innovation by adopting new technologies, followed by cost pressures/shrinking margins, and technological disruption from competitors.
An even wider body of respondents (84%) predicted that disruptors would likely challenge their businesses within just two years. This rose to 97% amongst financial institutions and 96% amongst consumer and retail companies.
Meanwhile, geopolitical complexities were also a major concern, with the demise of the TPP set to impact 79% of respondents. The geopolitical trends were also reflected in the survey, with an overwhelming 95% of respondents predicting Indian economic influence in the region would grow in the coming five years, compared with 77% who saw China's influence as continuing to expand.
Conversely, US influence appears on the decline in Asia Pacific. Just 16% see an increase in US economic influence in the region over the next five years, compared with almost half of business leaders (48%) who predict a decline.
Commenting on the research, Baker McKenzie Asia Pacific Chair Gary Seib said:
The world of business is more complex than ever. Identifying where companies and industries see predicted complexities emerging can help both governments and businesses themselves better prepare for this rapidly changing environment.
"That technology is at the top of the list is probably not a surprise to many, but the number of companies that expect disruption by competitive technology in just the next two years should give pause to any corporates that see themselves as immune to these forces."
Several other key trends were drawn out of the research, including a strong prediction of increased Mergers and Acquisitions (M&A) activity across the region (94% of respondents saw a rise), while litigation was also seen as on the increase by two thirds of businesses.
The three key areas of focus for corporates operating in Asia Pacific in terms of solving immediate complexities are: regulatory change, optimizing tax structures and business systems innovation.
Baker McKenzie Thailand Managing Partner Mr Thinawat Bukhamana said: “Thailand is becoming more active in fintech with many large organizations supporting start-ups. M&A activities in Thailand in 2016 have been strong, particularly in the manufacturing, retails, food, financial and insurance sectors. The level of activity is expected to be sustained in 2017, with major M&A deals from Thai businesses reaching out to the AEC as well as foreign companies investing in Thailand.”