Talent and technology development as top priorities for China CFOs, according to Deloitte

Published: 12 December 2017

According to the Q3 findings of the Deloitte China CFO Survey 2017, CFOs in China remain optimistic about the economic outlook, despite a significant increase in concern over geopolitical issues such as US foreign policies, North Korea's nuclear missile threat and ongoing uncertainties surrounding the Brexit. Compared to Q1 findings released at the start of this year when only 11% of participants indicated 'geopolitical issues' to be a top high-impact risk for businesses, this quarter's figure has more than doubled at 23% of participants showing anxiety in this aspect.

Other high-impact risks include detrimental government regulation and economic turmoil, but the overall prediction of RMB strength against other currencies stays positive, as a larger percentage of participants believe that the RMB will end up stronger against the American dollar and Japanese Yen by the end of this year.

"With an increasingly changing business environment, technology has become a key driver to new competition. Innovation is thus an important differentiator of competitiveness among existing market players, who need business agility to adjust their strategies in the face of digital and technological transformation," said William Chou, National Managing Partner of China CFO Program, Deloitte China. "While the financial services and consumer business sectors deem 'Competition' to be a key industry challenge, given the continuous emergence of new financial and retail products available on the market today, the TMT sector sees 'Talent' to be a top ranking issue, which is not surprising given its ample growth potential and increasing demand for technical expertise."

The survey also shows that the top areas for resource allocation are new product development (73%), IT investment (67%) and talent-related compensation (67%). "This finding suggests that in order for businesses to come up with the best innovative strategies and solutions, it is imperative for them to develop a sound IT infrastructure while cultivating and retaining a solid talent base," Chou added. Where growth planning is concerned, Chinese firms will continue to expand especially in areas such as talent acquisition and technological investment, with the 2018 growth plan of interviewed companies being 74% higher than that of 2017. 

Similar to the Q1 Survey findings, the Finance department continues to view their ability to provide metrics, information and tools needed for sound business decision-making as a top challenge. In addition, they seek also to exert more influence over business strategy, as well as to ensure that corporate initiatives achieve desired business outcomes.

"In an era where change is the only constant, leaders must be able to think on their feet, detect and deflect risks, as well as glean meaningful insight from data," said Jens Ewert, MNC Sector Leader, China CFO Program, Deloitte China. As such, the Q3 findings reflect that the most important skillsets for a CFO to interrelate with CEOs are leadership, risk, and analytics. While the majority of interviewed CFOs viewed themselves as 'Guardians', which, according to the Deloitte Business Chemistry model, is a working style that prizes concrete ideas, detail-oriented thinking and a respect for empirical proof. On the other hand, the most common dynamic for the CEO is reflected to be the 'Pioneer', which is a leadership model that appreciates new creations, new possibilities, and the possession of high energy for idea generation.

"Interestingly, CFOs and CEOs are seen to complement each other, as CFOs are least commonly regarded to be a 'Pioneer', with only 26% of participants choosing this type of personality for CFO versus 74% for CEO, and vice versa, CEOs are least commonly seen to be a 'Guardian', with only 10% of CFO participants choosing this as the best profile for a CEO," Ewert added.

The Q3 CFO survey was conducted in September 2017, including 109 participants with titles including CFOs, Finance Director, Financial Controller, and Vice President, 49 of which were from MNCs, 47 from POEs, and 13 from SOEs of different sizes and sectors, ranging from financial services, manufacturing, technology, media and communications, consumer business, life science and healthcare, energy and resources, as well as the public sector. 40% of participating enterprises have recorded a total revenue in the past financial year at RMB 5 billion or above.

The 2018 Q1 CFO Survey will be launched shortly, focusing on topics related to digital transformation, which will also be the theme of the upcoming CFO Vision Conference to be hosted in Hong Kong next April. Survey results will be shared at the Conference, along with high-level discussions on how emerging technologies are shaping the future of businesses.