Asia Business Outlook 2022
As the Chinese New Year is approaching, I wish you and your loved ones a happy and prosperous Year of the Tiger!
Last Thursday we had our annual Asia Business Outlook Survey (ABOS) event. In addition to presenting the highlights from the ABOS, which I will share below, we also invited three business leaders and industry experts to share their insights about the business opportunities and challenges in 2022.
Dr Rajat Argawa from Henkel shared his views regarding the opportunities and challenges in both the consumer goods market and the industrial space. Mark Kowk from AkzoNobel highlighted the massive size of the China market with opportunities not only in the first or second-tier cities but also third and even the fourth-tier cities. To seize these opportunities, MNCs need to understand the market and invest with patience. Dr Haitao Yin from Antai College of Economics and Management at Shanghai Jiao Tong University discussed China’s energy policies in light of its dual goals of peaking carbon emission in 2030 and reaching carbon neutrality in 2060. He stressed the importance of balancing de-carbonization and economic growth.
Asia Business Outlook Survey 2022
Each year, we confidentially survey our EICN members across Asia to gauge their expectations on their business in the following year. In late 2021 we conducted our Asia Business Outlook Survey (ABOS) 2022 and received over 300 respondents, in which 88 of them are based in mainland China. Our respondents are coming from more than 16 industries, where financial service, manufacturing, consumer goods, and ICT are the most concentrated sectors. The following are the highlights of the survey results of ABOS 2022.
Most of our respondents are from MNCs with global revenue over US$ 1 billion
In mainland China, 81% of the respondents are from MNCs with global revenue of over 1 billion USD. And more than half of these respondents are from MNCs with global revenue of over 10 billion USD. Outside China, 71% of the respondents are working in MNCs with global revenue higher than 1 billion USD, and 41% of them are from MNCs with global revenue over 10 billion USD.
Asia remains a key area for global revenue, but other areas’ business started to expand in 2021
In 2021, 37.9% of the respondents have more than 30% of their global revenue coming from Asia, which is actually 8.5% less than 2020. 37.2% of the respondents reported that 11% to 30% of their global revenue came from Asia in 2020. In 2021, this group of respondents become even larger, taking 44.2% of the total respondents.
2021 was the year of recovering from Covid-19
Among our respondents from mainland China, 35.8% of them experienced a revenue decline in 2020 but recovered their revenues in 2021. Adding 33.9% of them did not experience a revenue decline in 2020, nearly 70% of our respondents in mainland China have their revenues as high as their pre-pandemic levels. Outside China, 34.3% of the respondents experienced a revenue reduction in 2020 but recovered their revenues in 2021.
Optimism become even more popular in 2022
In 2022, 54.5% of our respondents are optimistic about the five-year business outlook in Asia, and 33.1% of them are slightly optimistic. One year ago, 48.02% of the respondents were optimistic and 40.53% of them were slightly optimistic.
The dominant majority are bullish about sales growth but less optimistic about profit margins
In mainland China, 89% of the respondents expect their sales to grow in 2022 relative to 2021, but only 85% of them expect profit growth. A similar pattern can be found among respondents outside China. This indicates the roaring commodity price in 2021 remains a concern for many MNCs about their profit margins in 2022.
Covid-19 restrictions remain the primary risk for business in Asia
For our respondents across Asia, continued Covid-19 restrictions remain the primary risk for their business in 2022. 62.22% of them select this as one of the top three business risks. The legal and regulatory environment is selected by 37.78% of the respondents are one of their top three business risks. And this percentage is higher in mainland China compared with the rest of Asia, which is consistent with the increasing regulation measures in mainland China in 2021.
If you would like to learn more about attending an upcoming EICN event, please contact us using the form on this page