CFO Survey provides highlights of recent survey results conducted in China. It includes opinions on a range of areas including the economic outlook, financial markets business trends, their organizations and CFO careers.
Deloitte China CFO Program has issued the 2022 2nd China CFO Survey CFO Leadership in the Age of Digital Intelligence. The survey was completed in September 2022 with the respondents of CFOs from Chinese mainland, Hong Kong SAR and Macau SAR.
The number of enterprises that are embracing transformation in the age of digital intelligence and making significant progress in this area is growing. However, a large proportion believe that their digitization journey is still at a preliminary stage. Electronic invoicing is now widely used by finance departments as they make progress toward digitization. Technology that is seen as more cutting edge, such as process mining, data-oriented process analysis, and machine learning, is still being explored. Roughly half of the respondents considered siloed information systems and databases within their organization to be their biggest challenge in driving digitization. Other key challenges that CFOs need to navigate include inadequate awareness of digital transformation among middle and senior managers, and insufficient resources and competencies in teams. Finance departments are shifting their focus to generating business insights and supporting business decision-making. Defining the finance function clearly and formulating a plan for transformation are CFOs' key drivers for the digitization of the finance function in the coming two years.
Compared with the results from January 2022 (the previous survey), respondents are more cautious about China's economy. However, 30% of respondents remain bullish on the current economic situation in China. More than 40% of CFOs are optimistic about China's economy over the coming year – a similar proportion to that of the previous survey. The share of respondents who are worried about the country's economic situation over the next 12 months has increased slightly since the previous survey, to 20%.
As for other regions excluding China, respondents feel most optimistic about the current U.S. economy. However, the proportion of respondents who feel positive about the U.S. economy over the next 12 months dropped to 21.9% (from 26.5% in the previous survey). CFOs are most pessimistic about the economic situation in Europe, with nearly half of the respondents rating its current status as bad or very bad. The survey shows that CFOs still believe China is in a better position than other regions to recover its economic growth.
China CFOs' views on the current and future (a year from now) status of the following economies, and changes from the previous survey (1 means very bad, 5 means very
Changes of China CFO's views on the current and future (a year from now)
External and internal risks of greatest concern
In this survey, the pandemic and post-Covid recovery is the most worrying concern to CFOs, following by geopolitical issue. CFOs' concern about changes in government policies and regulations has declined, although this remains the third most worrying risk factor for respondents. The percentage of respondents who consider inability to drive growth to be the most concerning internal risk factor has increased to nearly 60% from under 40% in the previous survey. The second most worrying internal risk factor is cost pressures. In addition, more than 30% of respondents in this survey are concerned that the paces of change in external and technology environments are faster than what their employees can manage.
The external risks worrying China CFOs
The internal risks worrying China CFOs
Expectations about improvements in company performance over the coming year have become more conservative. Among the respondents, 57.8% and 45.3% (respectively) expect revenue and net profit to increase by more than 5% in the coming year--a significant decrease from the 70.6% and 52.9% in the previous survey.
In terms of salary increases, 28.2% of the respondents expect increments to exceed 5%, a decrease by 18.9 percentage points since the previous survey. The performance index (average percentages of CFOs citing positive revenue and net profit growth) fell to +76.6 (from +86.8 in the previous survey), while the expansion index(average percentages of CFOs citing positive growth in capital expenditure and number of employees) dropped to +72.7 (from +86.8 in the previous survey).
Expectation for the following metrics over the next 12 months
The performance and expansion indexes
Special topic: CFO leadership in the age of digital intelligence
Enterprises' progress toward digitization
More than 80% of the respondents believe that their organizations are making progress in the area of digitization. Among these CFOs, with more than half of the surveyed enterprises are moving toward digitization with than 30% say their organizations have achieved a significant acceleration of progress since the year before. Among the respondents, 40.6% rate their company's level of digitization as on a par with the industry average, and 23.5% consider their company's level of digitization as above the industry average or leading the industry. Only 34.4% think their company's level of digitization is below the industry average.
Enterprises' progress toward digitization (compared with the previous year)
Organizations' level of digitization
While some enterprises have been actively pursuing and promoting finance digitization, there is still considerable room for improvement in this area. Among the respondents, more than half believe that the level of finance digitization in their organization is still in the preliminary stage. Only 31.2% of respondents believe that the level of finance digitization in their company has reached the intermediate stage, i.e. process automation is widely adopted. None of the respondents considered the finance digitization of their organization to be at an advanced stage.
Electronic invoicing is the most widely used technology in the finance department's digital transformation. Our survey results show that 31.3% of enterprises have widely used electronic invoicing, and 31.3% and 23.4% of enterprises plan to adopt it or are already at the pilot implementation stage respectively.
In addition to electronic invoicing, 20.3% of enterprises use intelligent document identification and electronic archives and 17.2% of them use financial management and mid-end data platform. Shared operating platforms or shared services platforms are widely used by 15.6% of enterprises, and another 18.8% of enterprises are at the pilot implementation stage.
Stage of finance digitization
Technology adoption by enterprises with “pilot implementation” and “widely used”
CFOs' challenges in driving digitization
As enterprises accelerate the digitization of the finance function, CFOs are encountering some challenges in driving this transformation. Information systems and databases with huge volumes of data are siloed, making it difficult to connect the organization's different functions. The largest proportion of respondents (46.9%) sees this as the biggest challenge.
CFOs are also facing challenges arising from inadequate awareness and a lack of skilled talent among employees in terms of digitization. Among the respondents, 40.6% state that employees, in particular middle and senior managers, do not have a consistent awareness of digital transformation, while 39.1% think that their team does not have sufficient resources and competencies. These issues have created barriers to the digitization of the finance function. The findings reflect that securing talent with the right skillset and a clear understanding of digitization is essential for the successful transformation of the finance department.
Moreover, 39.1% of CFOs also recognize challenges arising from their organization's current data governance model. Inconsistent standards and a lack of quality data are resulting in the fragmentation and decentralization of data within their organization. The fact that some data are still processed manually makes it impossible to centralize that data for management and analysis.
The biggest challenges for CFOs in driving digitization
Key drivers for digitization of the finance function
When asked what will drive the digitization of finance over the next two years, 46.9% of respondents selected “planning for the digitization of the finance function” as the most important. In addition, 34.4% of CFOs believe that data governance will play an important role in finance digitization over the next two years.
Key drivers for digitization in finance
- CFO Leadership in the Age of Digital Intelligence.
2022 2nd China CFO Survey Report
- The Sustainability Imperative for CFOs
2022 1st China CFO Survey Report
- CFO Survey: China set to lead global post-pandemic recovery in 2021
2021 Q1 China CFO Survey Report
- CFOs' perspectives on how trade tensions are affecting their outlook
China CFO Survey 2018 Q3
- CFOs' perspective on the adoption and impact of emerging technologies
China CFO Survey 2018 Q1
- Challenges and competition – growth agenda for CFOs despite economic uncertainty
China CFO Survey 2017 Q3
- CFOs are turning positive and prioritize business expansion in 2017
China CFO Survey 2017 Q1