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Sep 22, 2011
Despite a slowing global economy and market turmoil, more than half the executives polled among international firms are "positive" about business prospects over the next two years, according to a survey commissioned by law firm Allen & Overy.
The survey collected responses from 1,000 senior executives from large international companies in 19 countries including China, the United States, Japan, India, Brazil, France and Russia in July and last month.
It showed that 53 per cent of executives worldwide were "very confident" about their business in the next 24 months, and 43 per cent were "reasonably confident".
The reactions came even though the survey was conducted during turmoil in the US, Europe and Hong Kong with indices shedding more than 10 per cent of their values over concerns about the European sovereign debt crisis and US sovereign credit rating downgrade last month.
Mainland executives were more positive, with 65 per cent indicating confidence about their business prospects over the next two years.
David Morley, global senior partner of Allen & Overy, said the survey showed many international firms believed the stock market declines would have only a short-term impact on business.
"They believe in the upside potential for the long term in many markets such as China, India and other developing markets," Morley said. "While many developed markets are not doing well, many developing markets have produced good growth potential.''
He said his firm is busy handling initial public offerings and merger and acquisition deals for customers around the world.
In terms of expanding into other markets, the survey showed that the US is considered the second-hardest market to enter, after China, and more difficult than Russia.
Victor Ho, partner of Allen & Overy, said tough regulations and high start-up costs are the key reasons why executives find it hard to get a foothold in the US.
"The survey confirmed a growing strength and influence of Asian economies," he said. "Seventy-five per cent of respondents believe the region's influence to be on a rising trend, with 24 per cent saying it would be stable and only 2 per cent believing the region's influence would decline."
About 34 per cent of respondents said they believed the US and Europe would grow in strength and influence. But 22 per cent thought Europe's influence was declining, while 19 per cent said US sway was falling.
The survey showed two-thirds of Chinese executives expected their companies would expand through organic growth, while a third thought they would expand by mergers and acquisitions.
Thirty-four per cent of Chinese executives said they believed their home markets would have the highest growth potential, with the US next at 28 per cent and India at 24 per cent.
enoch.yiu@scmp.com Copyright (c) 2011. South China Morning Post Publishers Ltd. All rights reserved.