The pandemic has affected large areas of the economy, with organisations struggling, and often failing, to maintain profitability and headcount at existing levels. As businesses leave this disruptive period behind, executives are aware they need to make decisions about restructuring their business models and supply chains to adapt to a changing world.  While dealing with current day-to-day demands, executives are conscious that the business models of the future will not be the same as the present and that in one area at least – supply chains – things may have to change forever. 

Asian respondents cited

  • Average turnover loss of 17%
  • Average headcount loss of 16%
  • 39% have sought refinancing or restructuring in the last year
  • 51% have had to implement greater cashflow management strategies
  • 89% believe the pandemic means their company’s business model will have to change to maintain or restore competitiveness
  • 64% say this period has permanently disrupted their supply chains.

Socio-economic fault lines exposed by COVID-19 are creating an unforgiving marketplace, with companies under scrutiny from governments and the public as to their business practices and behaviour. Adjacent to this evolving landscape of governmental and public scrutiny is an increase in media scrutiny, which is a growing area of C-suite concern. There has been unprecedented pressure on companies and their staff over the past 12 months, Asia organisations expect post-pandemic employee wellbeing to be the most highly scrutinised area by the media over the next 12 months, with close to half (44%) of companies expecting scrutiny in this area.

Key Findings

  • In Asia 88% of organizations either are being or expect to be investigated in the next 12 months in respect to business conduct and the treatment of customers and their data, sustainability and ESG practices, and the relationship with public bodies and government contracts
  • 29% report that they are currently experiencing market dominance investigations, or expect them in the next year.

A particular focus of public scrutiny is the demand from all stakeholders for greater accountability on a range of issues but none more so than in the space of Environmental, Social and Governance (ESG). Companies in Asia are no exception. The looming threat of climate change, a focus of the recent COP26, and the legislative and regulatory steps that different countries are taking to combat it are impacting global markets, with businesses pressured to be compliant with local or international ESG standards. Asia, in particular, is critical to international supply chains, and businesses are under pressure to provide transparency into issues such as human rights and migrant worker standards.

Key Findings

  • 31% of respondents predict that ESG and sustainability developments will harm their company in the next 12 months
  • 39% of companies are being investigated in relation to sustainability and ESG – or expect to be in the next year
  • 89% of companies now view ESG as a strategic opportunity they cannot afford to ignore, rather than a risk to mitigate
  • 39% expect to conduct M&A in the next year to improve their ESG position

Making the best use of data analytics, machine learning and artificial intelligence (AI) has become an imperative for businesses everywhere. The ability to collect and analyse more and better data helps companies improve their decision making and implement more efficient business processes. It can also help identify risks which is imperative to building greater resilience.

Key Findings

  •  99% of business are using or thinking about productivity analytics to manage remote working
  • 89% of businesses admit their business model needs
    to fundamentally change to maintain or restore competitiveness compared to 80% in the G20
  • 48% of companies are under extreme pressure to
    integrate technology and innovation
  • Digitalisation is critical, but over 72% of Asian businesses are struggling with it

Decentralisation is likely to be a chief outcome of the global pandemic. As businesses have been forced to operate remotely for much of the last two years, they have seen the benefits of accessing talent and staying connected to clients in any part of the world. Increasingly virtual business life elevates the importance of protecting digital assets.

If a business’s most important assets are digital, becomes even more vital to protect them properly from cyber attacks by having the right people, systems and processes in place, including an incident response plan. Cyber attacks are inevitable, the key is building resilience - how quickly you can recover and get operations back up and running.

Key Findings

  • 40% - phishing/social engineering is the most common type of cyber-attack in Asia. Rising 8% from 2020

Notably, loss of customer/patient data the second most commonly reported cyber incident. In Asia, 40% of companies have reported this compared to 32% in the G20

Key Findings

  • 31% of APAC organisations were negatively impacted by data-privacy issues in the last 12 months
  • 33% are either being investigated now about their data privacy policies or expect to be in the next 12 months
  • Worryingly, only 54% say they are taking proactive steps in managing data privacy risks

Whilst private equity activity has been subdued in Asia over the last 18 months, dry powder is reaching an all-time high and dealmakers have built up reserves during this time and are eager to spend them. While a full-scale recovery may not be achievable in the immediate future, there are many reasons to be positive.

Ensuring you are not paying over the odds in a competitive market is as critical as undertaking thorough due diligence to minimise financial and reputational risk in what can be an opaque region.

Key Findings

Top three M&A priorities in Asia

  • To acquire technological platforms and systems - 40%
  • To enter new markets - 39%
  • To improve ESG credentials and capabilities - 39%

No other corporate structure has grabbed the business headlines in the last year quite as much as Special Purpose Acquisition Companies (SPACs).

While nearly all of the SPAC action has taken place in the US market, it is clear that investors have been looking at prospects in Asia too – 29% of respondents to our survey in Asia say that that they have been the target of a SPAC over the last 12 months. The Singapore Stock Exchange announced in September that they would allow SPACs to sit on the exchange, while at the same time Hong Kong commenced a consultation process seeking market feedback to introduce a listing regime to allow them.

If private companies wish to be considered successful after a SPAC transaction, executives should give at least four topics their closest attention:

  1. Internal controls & compliance
  2. Accounting & tax considerations
  3. Financial statement and disclosure preparation
  4. Compliance with required filings & registrations

Resilience Barometer Asia

Asian economies have suffered at the hands of Covid-19 perhaps longer than any other region in the world. The first to introduce lockdowns and perhaps the last to emerge with various restrictions on business and travel still in place, China in particular steadfast on its zero covid policy. As Asia emerges from the worst impacts of the virus, we analyse data points from over business leaders to spotlight priorities they will focus on moving forward in order to generate growth and build resilience for future shocks.

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