A Bos 20155

INVESTING INTO
ASIA’S REFORM LANDSCAPE

Asia Business Outlook Survey 2015
Sponsor
Investing into Asia’s reform landscape
Preface
Investing into Asia’s reform landscape: Asia Business Outlook Survey 2015 is an Economist Corporate
Network (ECN) report. It is based on a survey of more than 700 business leaders from across the Asia
Pacific region. We would like to thank all respondents to this annual Asia Business Outlook Survey.
January 2015
© 2015 The Economist Corporate Network. All rights reserved. All information in this report is verified to the best of the
author's and the publisher’s ability. However, the Economist Corporate Network does not accept responsibility for any loss
arising from reliance on it. Neither this publication, nor any part of it, may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior
permission of the Economist Corporate Network.
© The Economist Corporate Network 2015 1

Contents
1. Introduction 4
Asia’s business leaders share their perspectives on the region
2. Asia gathering steam? 5

Sentiment about Asia’s prospects is broadly positive, with expectations improving
3. Are expectations for Asia realistic? 8

Are the leaders of Asia operations successfully managing the expectations of their bosses at HQ?
And are they making their investment case strongly enough?
4. How impressive is the growth? 10

Headline rates of sales growth in Asia look strong, but are they less impressive than they seem?
5. Planning supremos 11
Executives proved adept at forecasting their businesses during 2014
6. Investment priorities in 2015 12

Companies are investing ever more heavily in China, Indonesia and India, but Japan and Myanmar
have lost their lustre
7. Weathering the reform storm 15

Companies have confidence that reform in India, Indonesia and China will bring meaningful improvements,
but are less certain about Japan and Thailand
8. Profitable growth? 17
How do profits vary by industry and by geography across Asia? And how will margins change in 2015?
9. Driving profitability up and down 19

Rising labour costs and strengthening competition are the two biggest headaches affecting corporate
profitability
10. Worker woes 23

Rates of staff turnover appear to be edging up across Asia
11. Will sunlight help China grow? 24

Executives take a broadly positive view of the country’s anti-corruption drive
12. Hub bubble and trouble 26

Which cities are becoming more attractive as regional management hubs in Asia?
13. Asia’s heavy-weight status (I) 28

The share of global revenue coming from Asia Pacific for multinational companies keeps rising
14. Asia’s heavy-weight status (II) 29

Asia’s share of global R&D spending is set to rise, but will lag behind its share of global revenue for the
world’s MNCs
2 © The Economist Corporate Network 2015

15. Asia’s heavy-weight status (III) 30

Global companies are transferring ever more decision-making power to Asia
16. Asia’s giants go their separate ways 31

Is Asia too big and too diverse to run as one management unit?
Appendix: Survey firmographics 32

A total of 704 companies took part in the 2015 Asia Business Outlook Survey, conducted in December 2014

1. Introduction
Asia’s business leaders share their views on the region
Every year, the Economist Corporate Network—the business advisory service of The Economist Group—
surveys the 2,500 C-level executives with whom it works in Asia Pacific. The collective views of these
business leaders provide critical feedback from the frontlines of doing business in the world’s fastest
growing region.
The latest Asia Business Outlook Survey (ABOS) was carried out in December 2014 and gives a
detailed perspective on how businesses are performing, what they expect in the year ahead, where
they are investing, and the challenges they face.
Some 704 respondents completed the survey, with an even spread from India in the west to Japan
in the east, and from China in the north, to Australia in the south. Respondents were all senior
executives, many of them with overall responsibility for the Asia Pacific region. They work in a wide
range of industries, from oil and gas to healthcare and pharmaceuticals, and from IT and telecoms to
banking and insurance. Of the respondents, 23% work at Asian multinational companies, while the
rest work for non-Asian companies. All of them are based in the region and run businesses here. (See
Appendix on page 32 for more details about the survey respondents.)

2. Asia gathering steam?

Sentiment about Asia’s prospects is broadly positive, with
expectations improving
Standing on the cusp of 2015 and looking ahead, the economic outlook is deeply uncertain. America is
enjoying a robust recovery. But while that bodes well for Asia’s exporters, it threatens an era of rising
interest rates, and the risk of instability as capital flows out of emerging Chart 1: How have your expectations for Asia Pacific
changed over the past year?
markets. In Europe, the economic picture is bleak, with growth stalling and (% of respondents)
deflation looking ever more likely. Concerns about the viability of the euro
Our expectations have improved
Our expectations are the same
currency are once more stalking the headlines. In Asia, the primary growth 100
Our expectations have declined
engine, China, is also slowing as authorities try to rebalance the economy.

Meanwhile, oil prices have tumbled, with markets uncertain whether this is 80
47 47 54
a positive sign, thanks to over-supply, or negative, reflecting weak demand.
60
Across Asia, however, business leaders responding to our survey are
looking through such concerns and projecting confidence in the future. At 40
38 41
a very macro level, some 54% of executives say their expectations for Asia 35
20
have improved over the past year. Only 11% say they have declined. This
makes the balance of opinion more optimistic at the start of 2015 than at 0 15 12 11
the same time during the previous two years. (See chart 1.) End of 2012 End of 2013 End of 2014
Source: Economist Corporate Network ABOS 2015
Chart 2: How did your revenue grow (or decline) in 2014, and what do you expect in 2015?
(annual % change, simple average of all respondents)
Forecast for 2015 Actual 2014 Actual 2013
China
10.1
9.6
8.6
South-east Asia
9.3
7.5
6.9
India
8.8
6.7
4.7
Australia/New Zealand
5
3.9
3
Japan
4.8
3.8
3.9
South Korea
5.2
3.3
3.3

What’s more, our survey shows that companies expect their sales to grow more rapidly in 2015 in
Asia than they did in 2014. Indeed, for every territory across the region, executives expect growth
rates to pick up in the year ahead. (See chart 2.)
As would be expected, China is forecast to deliver the fastest rates of sales growth, at 10.1%. That
is above our own view of China’s nominal GDP growth in 2015 of 9.2% (real growth rate of 7%). Is this
optimism deserved? The administration of president Xi Jinping is overseeing major structural reforms
to China’s economy. After years of growth fuelled by debt and over-investment, the government wants
to forge an economy powered by private consumption, with productivity improvements pushing up
incomes, and a liberalised financial system improving the allocation of capital. Companies that are
well-placed to benefit from such reforms should prosper, but there will be headwinds, particularly for
sectors centred on the property market. In the course of implementing these reforms, growth will keep
trending down, reaching around 5.5% (in real terms) by 2019.
South-east Asia is close on the heels of China in terms of the growth that executives are expecting
for their companies. The region has much to support high structural growth, not least supportive
demographics, rising investment into fixed assets such as infrastructure and factories, ongoing
urbanisation, deepening regional integration, and competitive cost structures relative to China. The
political scene in 2015 may well be more stable than last year too, with no elections on the immediate
horizon, and the turbulence in Thailand more contained than a year ago. However, weak commodity
prices will hurt some parts, notably Malaysia and Indonesia, while rising interest rates in the US could
cause problems.
The picture in India is brightening, in part thanks to the election of Narendra Modi as prime minister
in 2014. It would be foolish to expect Mr Modi to turn India around immediately, but with a rare
majority in the lower house of parliament, he is well-placed to implement meaningful reforms. The
appointment of a highly competent central bank governor in Raghurajam Rajan has also improved the
outlook by bringing stability to the rupee and the welcome prospect of falling inflation. Executives
clearly expect India to deliver better results in 2015 than in the recent past.
Japan’s economy faltered in 2014, largely due to a hike in the sales tax in April that tipped the
economy into recession. Many also felt a growing concern that the whole Abenomics experiment was
running out of steam. This weakness was clearly felt by executives in our survey, with the rate of sales
growth falling during 2014, albeit marginally. Yet expectations are more bullish for 2015. Why the
optimism? Crucially, the second stage of the sales tax hike, originally planned for October 2015, has
been postponed until at least 2017 which should allow consumer confidence to recover. The year ahead
should also see wages climb as the labour market tightens and pressure mounts on corporate Japan
to release some of its record—yet largely idle—cash holdings (estimated at US$2.1 trillion or 44% of
GDP).
Naturally, the growth story varies by industry as well as by geography. Table 3 shows the breakdown
for revenue growth by industry as well as by geography in 2014, and reveals how executives expect that
to change in 2015.

Table 3: What was your revenue in 2014 and what do you expect it to be in 2015?
(%, simple average of all respondents)
2014
South-east Australia/
China India Japan Asia New Zealand South Korea
Automotive 16.7 -3.6 7.1 2.5 0.3 8.6
Chemicals 7.2 7.3 2.9 5.8 1.5 1.6
Commodities 3.5 5.6 -0.8 4.6 2.8 0.2
Consumer goods & retail 6.4 6.6 3.1 6.3 3.6 2.0
Engineering 5.2 0.3 5.4 4.0 -0.5 6.3
Financial services 10.2 6.5 5.0 9.0 5.0 3.4
Hotels & leisure 10.0 6.7 2.5 7.5 8.1 13.1
IT & software 11.6 8.9 5.4 10.5 6.9 4.9
Manufacturing 8.2 6.6 2.7 3.8 -0.1 1.6
Media & marketing 10.0 6.6 1.8 9.7 5.9 3.4
Pharmaceutical & healthcare 14.6 12.3 6.4 11.1 3.5 6.8
Professional services 11.4 6.8 5.3 9.6 2.7 1.8
Property & construction 7.6 4.4 4.9 6.6 6.1 3.8
Transport & logistics 8.8 6.6 1.7 3.6 3.2 4.0
2015
Automotive 12.4 5.0 2.5 4.7 2.2 6.3
Chemicals 7.6 8.9 0.9 6.4 0.8 2.1
Commodities 5.6 6.3 0.7 5.8 2.1 1.5
Engineering 6.9 7.0 0.7 5.6 0.0 2.8
Hotels & leisure 8.9 7.5 3.9 9.0 7.5 10.1
IT & software 12.8 12.4 10.2 12.1 8.6 7.6
Manufacturing 8.6 7.5 3.6 6.3 3.1 2.6
Media & marketing 10.2 9.5 3.9 11.3 6.1 4.4
Green = accelerating rate of sales growth
Red = falling rate of sales growth

3. Are expectations for Asia realistic?

Are the leaders of Asia operations successfully managing the
expectations of their bosses at HQ? And are they making their
investment case strongly enough?
The majority of executives in this year’s survey feel that, in general, their company’s expectations for
Asia are about right. (See chart 4.) However, their views on specific markets produce some outliers.
More than a quarter think their companies are expecting too much of their China business. Over-
optimistic assessments of China’s potential from HQ have long been a headache for decision-makers in
the region. Importantly, however, this over-optimism has not blinded China managers to the realities
of a market that is slowing and changing, and most are successfully preventing overblown expectations
from their HQ from becoming unobtainable targets. (See chapter 5 on page 11.)
Chart 4: Are expectations for revenue growth at your company too high, too low or about right for the following
territories?
(% of respondents)
My company’s expectations are overly optimistic My company’s expectations are about right My company’s expectations are too low
100
14.2 11.1 8.9
15.9 18.5 17.8
80
60
64.3
76.5 62.1
74.5 71.8 68.9
40
20
20 26.8
0 11.3 12.4 12.4 12.6
South Korea Japan Australia/New Zealand South-east Asia India China
Chart 5: Is your company investing at the right rate in

Asia Pacific to achieve its revenue goals?
(% of respondents)
In South-east Asia, the balance of opinion is the opposite, where nearly
a fifth of respondents feel their companies should be more ambitious. India
(as is often the case) presents a more complicated case, with roughly a fifth
Yes of respondents reporting overblown expectations, but an equal number
No
57.3 reporting too little enthusiasm for the market.
42.7
Interestingly, while most executives feel their firms have a reasonably
accurate view of Asia’s potential, a significant minority (43%) feel their
firms are under-investing in the region. (See chart 5.) There is a disconnect
here. While expectations for revenue growth (chart 4) are broadly accurate,
the potential in the region may not be achieved because of under-
investment (chart 5).

These worries about under-investment vary by sector. (See chart 6.) Easily the most pessimistic
industry is transport and logistics, where 61% of companies feel they are under-investing in Asia.
Several issues might explain these concerns. In much of Asia, notably India and South-east Asia,
infrastructure is poor, and this may well prevent transport firms and logistics providers from investing
at a rate they feel is appropriate to Asia’s growth rates. In other markets such as China and Korea,
where roads, ports and airports are in place, it could be that the tremendous growth of e-commerce is
putting strains on express delivery and distribution networks.
Chart 6: Is your company investing at the right rate in Asia Pacific to achieve its revenue expectations?
(% of respondents)
No Yes
Transport & logistics
61.1 38.9
Pharmaceutical & healthcare
50 50
Media & marketing
50 50
Chemicals
48.4 51.6
IT & software
47.7 52.3
Manufacturing
44.4 55.6
Financial services
44.3 55.7
Consumer goods & retail
42.4 57.6
Professional services
39.7 60.3
Automotive
38.1 61.9
Commodities
34.8 65.2
Hotels & leisure
27.3 72.7
Engineering
26.7 73.3
Property & construction
23.1 76.9
0 20 40 60 80 100
Importantly, the sense of under-investment appears to be correlated with the seniority of

leadership committed to the region. Respondents from Asian companies (with board members
and global business heads based in the region) have the lowest level of concern. Those from non-
Asian firms with at least one board member in the region are slightly more concerned about under-
investment. But respondents from non-Asian firms with no board member in Asia show the greatest
worry. (See chart 7.)
Chart 7: Is your company investing at the right rate in Asia Pacific to achieve its revenue expectations?
(% of respondents)
No Yes
Asian companies
31.2 68.8
Non-Asian companies with a board member based in Asia
38.9 61.1
Non-Asian companies with no board member based in Asia
47.8 52.2

4. How impressive is the growth?

Headline rates of sales growth in Asia look strong, but are they
less impressive than they seem?
When compared to other parts of the world, headline rates of sales growth in Asia look impressive. But
how do they compare to growth in the underlying economy?
Chart 8 plots nominal sales growth at respondents’ companies against nominal GDP (we use nominal
growth to reflect both changes in the volume of business as well as changes in the prices charged). As
such, it offers a rough gauge of whether companies are growing more quickly or more slowly than the
broad economic backdrop.
In much of Asia, sales growth is roughly in line with GDP growth. This means that performance is
not necessarily cause for celebration. Take South-east Asia. Sales at the companies in our survey grew
there by 7.5% last year. But the underlying economy grew by 8.6%. While managers in Europe would
kill for sales growth of 7.5%, it arguably represents under-performance in the context of South-east
Asia.
The biggest under-performer in our survey was India. There, nominal GDP grew by a rapid 12.3% in
2014 (thanks to high inflation), but respondents say their nominal sales grew by only about half that
rate (6.7%).
Conversely, managers in China and Japan are doing better than might be expected. In Japan,
sales growth of 3.8% looks paltry by Asian standards. But given the economic context of Japan, the
performance was good.
Chart 8: Nominal GDP growth and nominal sales growth in 2014

(annual % change; sales growth is a simple average of all respondents)
Nominal GDP growth Nominal sales growth
India
12.3
6.7
South-east Asia
8.6
7.5
China
8.5
9.6
5.4
3.9
South Korea
3.7
3.3
Japan
2.1
3.8
9 12
10 0 3 6
© The Economist Corporate Network 2015
5. Planning supremos
Executives proved adept at forecasting their businesses during
2014
How good are business leaders in the Economist Corporate Network at forecasting sales for their
business? To find out, we looked back at our ABOS survey a year ago, conducted in December 2013.
We wanted to see what executives were forecasting for their business at the start of 2014, and then to
compare that with their actual performance at the end of 2014.
It turns out that forecasts were pretty accurate. (See chart 9.) While forecasts everywhere were a
little over-optimistic, companies missed their targets by only a small amount.
Executives were most accurate in their forecasting in China, where actual performance was almost
exactly what was targeted. This is interesting, because the Chinese economy is undergoing tremendous
change. Under Xi Jinping, the president, the government there is trying to re-balance its economy
away from an over-reliance on fixed asset investment, credit growth, and low-value manufacturing
towards consumer spending, financial stability, and services. Clean behavior and clean air are just as
important.
Growth rates are trending down as a result. But the companies in our survey seem to have the
measure of these changes and are re-calibrating their expectations accordingly. Companies have also
responded to the increased complexity of their operations in China, deploying their most experienced
managers and taking care to localise supply chains and marketing, making it a priority to stay close to
their suppliers and customers.
Chart 9: How do forecasts for revenue growth made at the start of 2014 compare with actual performance?
(annual % change; simple average of all respondents)
Forecast for sales growth in 2014 Actual sales growth in 2014
China
9.7
9.6
South-east Asia
8.2
7.5
India
7.3
6.7
4.2
3.9
Japan
4.7
3.8
South Korea
4.6
3.3
10
© The Economist Corporate Network 2015

0 2 4 6 8
11
6. Investment priorities in 2015

Companies are investing ever more heavily in China, Indonesia
and India, but Japan and Myanmar have lost their lustre
On almost every measure of investment, Asia stands out as the world leader. Consider Asia’s share of
global fixed asset investment: in 2014, the region accounted for 45% of the global total. Or consider
foreign direct investment: in 2014, Asia attracted 33% of the global total. Clearly, the region is an
attractive place for the world’s companies to deploy their capital.
But where will companies be investing their money in 2015? Chart 10 shows the investment
intentions of the firms in our survey. As is the case every year, China is the standout leader in attracting
new investment. The economy there is slowing, and the environment is becoming more uncertain, but
no company of any size can afford to ignore China. What’s more, while the current round of reforms
may be challenging for companies as they adjust to a “new normal”, companies in our survey are
optimistic that the outcome of the reform programme will be positive. (See chapter 7 on page 15.)
Second in the rankings of investment destinations sits Indonesia. While the country has had a
somewhat turbulent time over the past two years, what with falling commodity prices, a bruising
Chart 10: How will your level of investment change in the following markets during 2015?
(% of respondents)
We will increase our level of investment We are in the market, but will not invest more
We will reduce our investment in this market We have no plans to invest
China
71 20.6 3.4 5.1
Indonesia
59.9 21.1 2.8 16.2
India
57.9 21.8 4.4 15.8
Malaysia
42.1 38.4 4.4 15.1
Vietnam
41.3 27.1 3.3 28.4
Singapore
41.2 43.1 3.1 12.6
Thailand
36.2 35.6 4.2 23.9
Philippines
33.3 29.6 2.7 34.3
Australia
32.2 43.4 6.8 17.7
Hong Kong
31.3 39.6 5.9 23.2
South Korea
30.3 41 4.8 23.8
Myanmar
29.6 18.6 1.1 50.7
Japan
24.3 43.2 9.1 23.3
Taiwan
18.2 46.2 3.1 32.5
12 0 20 40 60 80
election, and major currency volatility, few companies can afford to ignore South-east Asia’s economic
engine, and the fourth most populous country in the world.
India sits third in the rankings, marginally behind Indonesia. The election of Narendra Modi as
prime minister in 2014 will surely improve the outlook for the country, and help to address some of the
issues that have put off investors in recent years. But it remains a difficult market. And while India has
a much larger population than Indonesia, and has higher growth rates, it remains a harder country to
navigate successfully as a foreign investor.
Behind these three giants, sit a whole set of much smaller markets in South-east Asia, such as
Malaysia and Vietnam. While the markets may be relatively small, growth rates are attractive, and
opportunities significant.
Comparing the investment intentions in 2015 (chart 10), with the intentions shared in our ABOS
survey last year (chart 11), reveals how companies have changed their views on different markets. Of
note is the position of Myanmar. While it is still of great interest to many firms, its ranking has fallen
from fourth to 12th. Quite possibly the initial euphoria around the nation opening up has given way
to the reality that Myanmar is extremely poor, with weak institutions and a difficult business climate.
While players in areas such as infrastructure and low-value consumer goods are doing well, the market
remains too early-stage for many firms.
Chart 11: How did your level of investment change in the following markets during 2014?
(% of respondents)
We increased our level of investment We were in the market, but did not invest more
We reduced our investment in this market We had no plans to invest
China
68.7 21.3 3.3 6.6
Indonesia
52.6 26.3 3.2 17.9
India
45.8 37.4 12.1 4.7
Myanmar
38.7 16.1 0.6 44.6
Thailand
35.9 42.6 0.5 21
Malaysia
34.2 43 2.6 20.2
Vietnam
31.6 40 1.1 27.4
Singapore
30.7 51.8 4.5 13.1
Japan
26.5 52 7.1 14.3
Australia
25.5 46.9 10.4 17.2
Hong Kong
25.5 51 6.9 16.7
Philippines
25.3 45.6 2.2 26.9
South Korea
24.2 51.6 3.2 21
Taiwan
17.8 56.8 2.2 23.2
0 20 40 60 80 100
Also of note is the position of Japan. Last year it ranked 9th, but this year has fallen to 13th. The
number of companies planning to raise their investment in Japan has fallen, while those intending to
reduce their investment has risen. Undoubtedly part of this change of heart centres on perceptions
of president Shinzo Abe and his programme of Abenomics. Many companies are keen to see his “third
arrow” structural reforms take hold, but little of substance has been implemented so far.

7. Weathering the reform storm

Companies have confidence that reform in India, Indonesia and
China will bring meaningful improvements, but are less certain
about Japan and Thailand
Many Asian countries have unleashed major economic and political reforms over the past year or so.
Are these making a meaningful difference to business? We asked respondents to gauge the impact of
ongoing reform programmes on their business in seven countries across Asia where the reform efforts
are most ambitious. (See chart 12.)
Overall, companies do not expect great changes to occur over the coming year. However, over three
years executives are much more confident that positive change will arrive.
Executives are most confident of positive change in India and Indonesia. Respondents are also
positive that China will deliver major improvements for business over a three-year timeframe, although
over a one-year horizon some 15% say reforms will make things worse before they get better.
At the other end of the scale, executives are largely skeptical that reforms in Thailand and Japan will
make much difference to the outlook for their business. Both nations face deep structural challenges,
Chart 12: Many parts of Asia have launched major economic and political reform programmes in recent times. What impact do
you expect these efforts to have on your business in the next 1 year and next 3 years?
(% of respondents)
Significant improvement to business Slight improvement to business No real change
Slight worsening to business Significant worsening to business
India over 3 years
42.4 39.2 15.1 2.9 0.4
India over 1 year
23.9 47.9 25 2.9 0.4
Indonesia over 3 years
38.6 43.7 14.7 2.7 0.3
Indonesia over 1 year
22.1 43.9 29.9 3.4 0.7
Myanmar over 3 years
27.4 36.3 33.6 2.7
Myanmar over 1 year
17.7 32.3 47.8 2.2
China over 3 years
26.9 49.4 16.8 4.6 2.3
China over 1 year
10.6 42.4 32.1 12.9 2
Malaysia over 3 years
12.9 38.7 42.3 5.7 0.4
Malaysia over 1 year
8.8 27.5 55.3 7.4 1.1
Thailand over 3 years
15.1 32.5 42.1 8.1 2.2
Thailand over 1 year
7.9 31.4 48 9.7 2.9
Japan over 3 years
9.2 34.3 49.4 5.9 1.1
Japan over 1 year
6.2 33.3 51.6 8.1 0.7
0 20
© The Economist Corporate Network 2015 40 60 80 100 15
from ageing demographics and protectionist policy in Japan to divisive politics in Thailand, and many
business leaders feel that reforms are unlikely to address these issues in a meaningful way.

8. Profitable growth?
How do profits vary by industry and by geography across Asia?
And how will margins change in 2015?
Asia has decent topline growth. But what does the bottom line look like? In aggregate, all regions
offer decent profitability. But some parts of Asia offer better profits than others. No surprise, India
is bottom, followed by China. These are difficult markets, with major uncertainties and strong local
competitors. The mature markets of Australia and New Zealand, with their reliable business climate,
offer the best profits, although relatively low growth. (See chart 13.)
Chart 13: What were your operating profit margins in 2014 and what do you expect them to be in 2015?
2015 2014
14.8
14.9
South-east Asia
14.8
14.3
Japan
13.5
13.4
South Korea
13.7
12.8
China
13.4
12.4
India
12.9
11.8
The profit picture varies by sector as well as geography. The pharmaceutical and IT/software sectors
are most profitable, while the transport and logistics and automotive sectors are least. (See table 14.)
9 12
0
Looking ahead to 2015, how do companies expect their profitability to change? Unsurprisingly, the
3 6 15
outlook for commodities is poor, with declining margins forecast for every part of the region except
China. The retail sector is also set to see margins fall in many parts of the region.
In terms of geographies, Japan stands out as having the greatest number of sectors where the
outlook for 2015 is worse than 2014. Digging a little deeper, the sectors that did well during the
initial burst of optimism surrounding Abenomics (financial services and retail in particular) are less
confident about 2015. On the other hand, the weak yen is improving profitability for some sectors.
For example, the yen is boosting inbound tourism which reached a record level in 2014 and supported
the hospitality sector. Just as clearly, the weak yen is helping the manufacturing sector. Given the
improving margins that the sector expects in 2015, this may be the year that yen weakness translates
into export strength.

The most positive geography is China, where every sector is expecting margins to improve in 2015.
This finding plays into one of the themes of this year’s ABOS report, namely that companies remain
confident about China and its economic outlook despite the challenging reforms that lie ahead.
Table 14: What were your operating profit margins in 2014 and what do you expect them to be in 2015?
2014
Automotive 9.5 4.2 8.4 8.5 8.5 9.6
Chemicals 13.1 9.8 13.5 13.9 11.8 11.9
Commodities 8.9 11.3 10.5 15.2 10.7 12.8
Engineering 9.2 9.0 13.3 13.0 11.9 14.4
Hotels & leisure 15.8 14.3 14.3 18.1 18.4 16.3
IT & software 13.0 16.5 17.3 19.8 17.6 15.8
Manufacturing 10.8 9.5 11.9 12.4 12.8 11.1
Media & marketing 16.5 17.1 13.8 17.1 19.5 15.5
2015
Automotive 9.8 6.2 8.4 8.1 8.5 9.6
Chemicals 13.3 9.9 13.3 13.5 11.8 12.6
Commodities 9.6 10.8 10.4 14.3 9.9 11.9
Engineering 10.8 10.0 12.8 13.4 13.1 16.6
Hotels & leisure 16.9 15.7 15.7 19.2 18.4 17.9
IT & software 16.3 16.8 15.9 20.2 18.5 16.1
Manufacturing 12.2 11.5 12.9 12.9 13.5 11.8
Media & marketing 17.6 15.8 14.4 16.1 18.8 16.2
Green = improving profit margins
Red = falling profit margins

9. Driving profitability up and down

Rising labour costs and strengthening competition are the two
biggest headaches affecting corporate profitability
A company’s profitability is impacted by many things, some of them specific to a company, others to
the industry in which it works, and yet others to the economic and political context. In this year’s ABOS
survey, we asked companies to rate how different issues in the broad economic and political backdrop
in different parts of Asia are impacting profit margins.
In China, companies say the biggest challenge to profitability is rising labour costs. (See chart
15.) This is a perennial isssue in China, with a penchant for blooming early in the year, lunar new year
bonuses are expected and new labour contracts are signed. The size of the workforce in China has
now peaked, which means steady pressure on wage rates. In addition, the government’s directive to
increase minimum wage rates within the current 12th Five Year Plan, has resulted in wage growth that
is well above inflation and GDP growth levels.
In second place is the strong growth of local companies. This trend is clear to see in many sectors,
from the rise of China’s internet giants such as Alibaba and Tencent, to the fact that the biggest
smartphone maker in China, Xiaomi, is now local. Foreign companies have long complained about
non-tariff protectionist barriers, as well as the theft of intellectual property (IP), but the Chinese
giants of today are incresingly competing with their own IP, and without state support. In third place,
companies are worried about policy uncertainty. As China shifts to a new economic model, companies
are exposed to new rules and new government aspirations. While this creates opportunities for some
firms, it undermines old certainties for other companies.
Chart 15: In China, how are changes in these issues impacting your profitability?
(% of respondents)
Negative Neutral Positive
100
6.8 9.6 15.1
24.6 23.9
80
26.8
34.9 58.1 57.8
60
40.4
62.6
40 62.8
66.4 23.6
55.5
20 35.2
35
22.3 18.3
0 13.3 7
Labour Costs Strength of Policy and regulatory Debt levels and Economic growth Currency Technology
competition environment credit availability movement penetration
in the market

Our survey this year reveals that, of all markets in Asia Pacific, India is the place where firms have
the lowest profit margins. (See chapter 8 on page 17.) What cost issues are companies most concerned
about? The number one struggle is the strength of competition. (See chart 16.) Foreign companies,
which make up the majority of companies in this survey, face many challenges from local rivals. For
a start, ownership restrictions discriminate against foreigners, preventing them from making the
right levels of investment needed to compete. What’s more, India is a difficult market, with uncertain
rules, poor infrastructure, and murky business practices. While local companies have many years of
experience learning how to cope, foreign firms are not so sharp.
Companies operating in India are also highly concerned about rising labour costs. Some 40% of
firms say the issue is having a major negative impact on their operating margins. Given India’s growth
rates, the education system is clearly not providing enough workers with the right skills, leading to
sharp wage inflation.
In third place in the ranking of profit concerns sits currency volatility. The rupee has tumbled sharply
over the past year and a half. However, it now looks to have stabilised, so perhaps this concern will be
less acute in the year ahead.
Chart 16: In India, how are changes in these issues impacting your profitability?
(% of respondents)
100
17.5 16 18.2 16.9
80 37.6
52
60 42.5 46.9
53.7 74.8
69.4
34.8
40
41.6
20 40.1 37.1
28.1 27.6 19
13.7
0 6.4 6.2
Strength of Labour Costs Currency Policy and regulatory Debt levels and Technology Economic growth
competition movement environment credit availability penetration
in the market
The biggest issue impacting profitability in Japan is currency movement. (See chart 17.) With the
yen being driven down by the Bank of Japan’s huge quantitative easing programme, this is positive for
many Japanese companies, who are enjoying a boost not only to export competitiveness but also to
the value of repatriated foreign earnings. However, most of the respondents to our survey are non-
Japanese companies for whom a weak yen is bad news in that it makes imports less competitive and
reduces the value of profits being sent back to head office. Sadly for foreign firms, currency volatility is
likely to continue with interest rates expected to rise in the US this year and no end in sight for Japan’s
continued loose monetary policy.

Chart 17: In Japan, how are changes in these issues impacting your profitability?
(% of respondents)
100
11 6.3
20.2 15.2
29.5 22.1
80
41.1
60 45.5 60.3 69.8
47.1
40 69.4 77
55
20
34.3
28.7
24 23.4
0 8.5 7.8 3.9
Currency Strength of Labour Costs Economic Policy and regulatory Debt levels and Technology
movement competition growth environment credit availability penetration
in the market
In South-east Asia, rising labour costs are the biggest challenge to profitability. (See chart 18.)
High structural growth means demand for labour generally outstrips supply, forcing up wages.
However, many nations, including Thailand, Indonesia and Malaysia have all raised minimum wages
in recent years, adding to the problem. Even in Singapore, with its highly educated workforce, new
government restrictions on foreign workers are putting upward pressure on wages. The second biggest
challenge is strengthening local competition. In almost every sector, from banking to retail to software
to chemicals, a new generation of regional giants is rising up and challenging the established global
multinationals. The launch this year of the ASEAN Economic Community is likely to see competition
within the region get even stronger.
Chart 18: In South-east Asia, how are changes in these issues impacting your profitability?
(% of respondents)
100
17.5 17 18.2
23
80 34.2
54.3
60 42.4 45.7 79.9

53.3 69.6
40 47.1
41.3
20
40.1 37.3
23.7 16.5
18.6 12.2
0 4.4 3.6
Labour Costs Strength of Currency Policy and regulatory Debt levels and Technology Economic growth
competition movement environment credit availability penetration
in the market

In Australia and New Zealand, companies say the number one challenge to profitability is rising
labour costs. (See chart 19.) Almost 40% of companies cite this issue as having a negative impact
on profit margins. Had we asked this question two years ago, respondents in Australia might well
have listed currency movements as being the number one challenge, given that the strong dollar had
not only hurt exporters, but had also made many imports cheaper than locally-produced goods and
services. Today, however, with the dollar much weaker, the issue ranks only third as a challenge to
profits. Nonetheless, for foreign firms sending profits home, a weaker dollar isn’t necessarily good
news.
Chart 19: In Australia and New Zealand, how are changes in these issues impacting your profitability?
(% of respondents)
100
5.2
13.3 18.2 15.6
23.3
80 33
41.4
56.1
60
58
53.5
47.5 61 77
40
55
20 38.7
28.6 28.3
19.5
0 15.7 7.4 3.6
Labour Costs Strength of Currency movement Economic growth Policy and regulatory Debt levels and Technology
competition environment credit availability penetration
in the market
The strength of domestic competition is the biggest challenge for firms operating in South Korea,
although the issue of rising labour costs is not far behind. (See chart 20.) Indeed, labour costs
have increased by around 27% since 2010 leading to significant downward pressure on profitability.
Interestingly, although much is made of the potential risk of high levels of consumer debt in South
Korea, this is overwhelmingly regarded as a non-issue by almost 90% of respondents. This may bode
well for a return of private consumption in the coming months.
Chart 20: In South Korea, how are changes in these issues impacting your profitability?
(% of respondents)
100
7.9 3.5
10.4
19 15.6
80
40 46
68
60 57.6
64.6 68.8
80.1
40
49.4
49.1
20
34.5
28.5
16.4 15.6
0 10.6 9.5 4.9
Strength of Labour Costs Policy and regulatory Currency Economic growth Debt levels and Technology
competition environment movement credit availability penetration
in the market

10. Worker woes

Rates of staff turnover appear to be edging up across Asia
One issue impacting profitability is staff turnover (the percentage of workers that must be replaced
each year). Finding and retaining staff is a perennial problem in the high-growth parts of Asia. In
2014, the picture appeared to worsen, albeit modestly. (See chart 21.)
Companies operating in the fastest-growing economies, notably China, India and South-east Asia,
had to cope with double-digit staff turnover rates. South-east Asia saw its churn in workers accelerate
most rapidly in 2014 compared to the year before. This perhaps reflects rising foreign investment—
inflows of FDI into ASEAN are at record levels. What’s more, as the costs of doing business in China
have risen, some companies have looked to South-east Asia as an alternative, which has in turn led to a
more intense struggle for talent to manage the growing operations there.
Conversely, the relatively mature, low-growth markets of Japan, South Korea and Australasia appear
easier to manage. Unsurprisingly, turnover rates in Japan are again the lowest in Asia, attributable in
part to Japan’s inflexible hiring and firing regulations.
Chart 21: What is your staff turnover in these territories?

2014 2013 2012
China
12.9
11.6
10.8
India
11.9
10.5
9.9
South-east Asia
11.5
9.5
8.3
8.5
7.5
6.6
South Korea
6.5
6.1
4.4
Japan
4.8
4.7
4.7

11. Will sunlight help China grow?

Executives take a broadly positive view of the country’s anti-
corruption drive
Another issue that has the potential to hurt profitability is China’s ongoing anti-corruption drive. For
some sectors, such as luxury goods, the austerity and anti-corruption measures have hurt sales as
lavish gift-giving is curtailed. For other sectors, investigations and fines have had a big impact.
Interestingly, however, most executives in our survey take a positive view of the anti-corruption
efforts. They believe that ultimately it will improve the business climate by creating a more level,
transparent playing field. (See chart 22.)
Chart 22: In China, what impact is the ongoing anti-corruption campaign having on your business?
(% of respondents)
40
35 39
30
29.9
25
20
15 18.8
10
5
6.6 5.7
0
Significant positive impact Slight positive impact No change Slight negative impact Significant negative impact
However, while anti-corruption efforts are generally seen in a favourable light, many in our survey
do sense that the motivations behind some of the investigations might not be entirely pure. For
example, almost half of respondents feel that the anti-corruption efforts are being targeted most
vigorously against foreign firms, especially the pricing and anti-monopoly probes. (See chart 23.)
Chart 23: In China, do you feel the anti-corruption campaign is targeted more at local companies or foreign
companies?
(% of respondents)
40
35
35.4
30
31.9
25
20
15 17.4
10 12.5
5
0 2.8
Significant bias against Slight bias against Evenly targeted at both local Slight bias against Significant bias against
foreign companies foreign companies and foreign companies local companies local companies

And yet, while these concerns are very real, and while they come against a backdrop of rising
uncertainty thanks to president Xi Jinping’s efforts to re-set China’s economy onto a more sustainable
footing, foreign investors have not dimmed their enthusiasm. As Chapter 6 shows, foreign investment
continues to grow. (See page 12.)

12. Hub bubble and trouble

Which cities are becoming more attractive as regional
management hubs in Asia?
How are perceptions changing around the relative attractiveness of different cities in Asia as hubs for
putting management talent and operations? Moving up the ranks are cities that have worked hard to
improve business-friendly infrastructure and regulations: Singapore is the clear leader here, followed
strongly by Shanghai. More than a quarter of respondents felt that both Jakarta and Kuala Lumpur
were also improving as business hubs. (See chart 24.)
At the other end of the spectrum, several cities saw their operating environments deteriorate
in 2014. Well over a third of respondents said Beijing, Bangkok and Hong Kong have all worsened.
Negative headlines—from Beijing’s choking air, to Thailand’s long-roiling political turmoil, to the
disruptions caused by the Occupy Central movement in Hong Kong—served to dent the perceptions of
these three cities.
Chart 24: Over the past year, how have your views about the following cities changed as centres for running
regional management operations?
(% of respondents)
Significant improvement Slight improvement No change Slight deterioration Significant deterioration
100 1.1 1.1 1.2
2.5 2.8 2.8 3.0 6.9
9.5 7.1 6.5 13.8 14.7
10.5 9.6 7.8
15.7
80 31.9
27.3 27.9
43.8
60 58.5 57.5
73.7 57.5
69.5 74.3
40 45.1 40.1 40.8

33.3
25.6
20
25.4 25.6
16.5 14.5 13.2 15.2 13.2
15.1 12.7
0 5.6 10.4
1.5 3.9 3.5 2.2 2.8 3.7 3.4
Kuala Lumpur Seoul Singapore Jakarta Shanghai Sydney Tokyo Hong Kong Bangkok Beijing
What are the factors that people cite as being cause for concern? Chart 25 outlines which
operational challenges would motivate managers to move out of a hub. (The chart shows the number of
times that respondents identified each issue as being significant.)
In this analysis, certain “pan-Asian” operational headaches emerge; the lack of talent is a nearly
uniform challenge across all the region’s hubs. Outside of these, there are different challenges in “rich
hubs” versus “emerging hubs”. Unsurprisingly, rising costs are the primary concern for managers
in the “rich hubs”, particularly in Singapore. “Emerging hubs” have both more diverse, and more
numerous, complaints: least-loved Beijing, in particular, had numerous complaints about pollution,
congestion and its overall quality of life. Interestingly, despite perceptions that Shanghai is improving

as a regional hub, it still ranked second in the number of concerns that respondents raised about the
city.
Somewhat worrying for Hong Kong, respondents believe it suffers from both “rich hub” problems
like costs, as well as copious “emerging hub” challenges. It ranked just after Jakarta in terms of
pollution (though far lower than Beijing or Shanghai), and second in terms of congestion, possibly
due to the impact of the Occupy Central movement’s closure of key roads during a two-month period in
2014.
Hong Kong was also found to have the region’s highest degree of political uncertainty, after
Bangkok. The pragmatic view would say that managers are accurately gauging the impact that the
Occupy movement has had on Hong Kong’s efficacy as a place to run regional operations: if Hong Kong
continues to bristle under China, this cannot be helpful for businesses still trying to manage China-
centric businesses there. An optimistic view would see the opposite: that there is danger in conflating
the Umbrella Revolution’s disruptions with eroding efficiency, when its longer-term impacts could
possibly result in increased political transparency and government responsiveness.
Chart 25: Would any of these issues cause you to consider relocating staff away from these cities?
(Number of respondents)
Pollution Congestion/transport infrastructure Lack of talent/cost of talent Political & policy uncertainty
Other costs (eg property,utilities) Policy & regulatory environment Quality of life issues (eg schools,medical care)
800
700
100
600
91
500 64 58
61 69
400 55 25
77 43
84 55
16 34
16
300 47 31
120 58
140
84 104 19 5
81
200 49 14 14
6
62 13 19
69 81 113 16 3
44 12
231 131 77 28
100 48
113 48 71 6 12 75
134 20 12 3
83 63 45
59 46 51
0 38 51 7 16 15 7
14 4 5 4 1
Beijing Shanghai Jakarta Bangkok Hong Kong Kuala Lumpur Singapore Tokyo Seoul Sydney

13. Asia’s heavy-weight status (I)

The share of global revenue coming from Asia Pacific for
multinational companies keeps rising
Chart 26: What share of your global revenue came Asia’s importance to global MNCs continues to rise, as does their
from Asia Pacific in 2014 and how will that change by
2019?
expectations of the region’s future worth to their business. Considering
(%, simple average of all respondents) only the 542 non-Asian companies in our survey, such firms estimate that
Asia’s share of global revenue (%) at non-Asian companies 20% of their global revenue came from Asia in 2014. By 2019, they expect
35 Asia’s share of global GDP (%)
34.9 that share to rise to 29%. (See chart 26.) Only 30% of our MNC respondents
30
31 make more than a quarter of their global revenue out of Asia—but more than
28.5
25 half believe this will be the case in five years’ time.
20
When compared to Asia’s share of global GDP, managers at these
20.2
15 companies clearly have some catching up to do. But, as our results suggest,
10
managers are confident that they will keep closing that gap in the years
ahead.
5
0
When these responses are parsed by industry sectors, we see a tendency
2014 2019 for higher value-added verticals, such as healthcare and financial services,
Note: Data is only for non-Asian firms
to report a lower share of their global revenue coming from Asia. Doubtless
as incomes rise
Chart 27: What share of your global revenue came from Asia Pacific in 2014 and how will that change by 2019?
across the continent,
as service sectors
2019 2014
Transport & logistics
28.2
35.8
expand, and as
Consumer goods & retail
26.9
32.3 middle class spending
Property & construction
35.7 patterns develop—
26.8
Manufacturing
31.9
such as investing
more heavily in
24.9
Chemicals
30.3
Engineering
24.2
the future through
32.7
Hotels & leisure

23.6 health, education and
22
33
financial services—this
Automotive
21.6
27.8
picture will change.
IT & software
21.1
30.7 (See chart 27.)
Commodities
28.1
20.4
Professional services
28.5
19.1
Media & marketing
28
18
Financial services
24
16.2
Phamaceutical & healthcare
10 23.8
13.7
0Source: Economist Corporate

5 Network ABOS 2015 15 20 25 Note: Data is30only for non-Asian firms
35 40

14. Asia’s heavy-weight status (II)

Asia’s share of global R&D spending is set to rise, but will lag
behind its share of global revenue for the world’s MNCs
The share of R&D that global, non-Asian, companies conduct in Asia is Chart 28: What share of your global R&D was
conducted in Asia Pacific in 2014 and how will that
rising. However, it still lags behind the share of global revenue coming out change by 2019?
of Asia for these firms. (See chart 28.) This disconnect will surely change, (%, simple average of all respondents)
although respondents do not expect it to change in the next five years. 30

% of R&D done in Asia Pacific by non-Asian companies
Asia’s share of global revenue (%) at non-Asian companies
One reason might be that some global firms are conducting R&D in 28.5
25
Asia as part of their global manufacturing processes. In the lingua franca
of sourcing managers, this is not part of the “revenue side” of their 20
20.2
Asian operations, and not directly correlated with their regional sales 15 17.9
performance. As supply chains designed to service world-wide markets
evolve to be more Asian market-centric (again, reflecting Asia’s growing 10 12.3
proportion of global market demand), this will change. 5
0
2014 2019

15. Asia’s heavy-weight status (III)

Global companies are transferring ever more decision-making
power to Asia
Global companies are committing ever more of their leadership team to Asia in response to the region’s
rising importance. This has been a trend that the ABOS project has been tracking for many years, and
this year sees the trend continue, with the number of non-Asian companies posting a board member to
the region rising to 40.6%. (See chart 29.)
The increase during 2014—a rise of one percentage point over a year earlier—is meagre compared
to some recent years. In 2012, with Western markets in disarray following the Global Financial Crisis,
the number of non-Asian companies posting a board member to Asia rose from 28.6% to 38.3%. The
jump was driven by the need to put senior decision-makers closer to the epicentre of global growth.
However, looking to the future, respondents expect board representation to keep rising, and indeed
for the trend to pick up speed.
The same trend holds broadly true for companies re-locating the global heads of business units to
Asia rather than leaving them in their traditional home markets. (See chart 30.)
Chart 29: Are any members of your main board of directors based in Asia Pacific?
(% of respondents answering yes)
60
50
53.3
40
39.7 40.6
38.3
30
27.9 28.6
20 25.7
19.1
10
0
2008 2009 2010 2011 2012 2013 2014 Will have by 2019
Source: Economist Corporate Network ABOS 2015 Note: Data is only for non-Asian companies
Chart 30: Are any of your firm’s global business unit heads based in Asia Pacific?
(% of respondents answering yes)
60
50 58.2
51.9 51.3 52.2
40 45.6
30
20
10
0
2011 2012 2013 2014 Will have by 2019

16. Asia’s giants go their separate ways

Is Asia too big and too diverse to run as one management unit?
How are the reporting structures at multinational companies in Asia changing? As the regional
economy gets ever bigger (now almost a third of global GDP), it makes sense for companies to carve
up Asia into smaller units for the purposes of reporting and more effective management. The giant
diversity in Asia is an equally important consideration. What works in China may not work in India.
Having different management teams can help firms to cope with diversity.
At present, most companies still manage Asia under a single reporting structure. But this is slowly
changing. Given the size and importance of the China market, a significant minority of companies
(about one-fifth) already manage the country as a standalone reporting unit. (See chart 31.)
India, the other regional giant, is also increasingly not part of the Asia reporting unit. At many
companies India is now managed as a standalone unit. But equally many companies bundle it together
with the Middle East, with the regional management hub located in a place like Dubai. Not only does
Dubai have a rich seam of Indian managerial talent, but the trading and cultural links between India
and the Middle East are historically deep and continue to deepen.
Chart 31: Do these countries report into an Asia Pacific reporting unit, a different non-Asia unit, or are they a standalone
reporting unit?
(% of respondents)
Standalone reporting unit Part of a different, non-Asia Pacific reporting unit Part of Asia Pacific reporting unit
China
19.8 3.4 76.8
Japan
13 4.7 82.3
India
11.4 13.9 74.7
8.8 8.2 83
South Korea
6.3 3.7 90
South-east Asia
5 2.8 92.3
0 20 40 60 80 100
Appendix: Survey firmographics

A total of 704 companies took part in the 2015 Asia Business
Outlook Survey, conducted in December 2014
Survey respondents by global revenue Survey respondents by location of global HQ

(% of respondents) (% of respondents)
Asia 23.0
Less than US$1bn 34.4 Australasia 5.5
US$1bn to US$10bn 34.4 Europe 36.8
US$10bn or more 31.1 Middle East/Africa 1.0
North America 33.7
Survey respondents by industry sector

(% of respondents)
Financial services 20.0
Professional services 11.0
IT & software 9.4
Manufacturing 8.3
Media & marketing 6.9
Pharmaceutical & healthcare 6.4
Consumer goods & retail 6.3
Chemicals 5.4
Property & construction 5.3
Commodities 4.9
Automotive 3.6
Hotels & leisure 3.6
Engineering 3.4
Transport & logistics 3.4
Telecoms 2.0

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INVESTING INTO

ASIA’S REFORM LANDSCAPE

© The Economist Corporate Network 2015 1

2. Asia gathering steam? 5

3. Are expectations for Asia realistic? 8

4. How impressive is the growth? 10

6. Investment priorities in 2015 12

7. Weathering the reform storm 15

9. Driving profitability up and down 19

10. Worker woes 23

11. Will sunlight help China grow? 24

12. Hub bubble and trouble 26

13. Asia’s heavy-weight status (I) 28

14. Asia’s heavy-weight status (II) 29

2 © The Economist Corporate Network 2015

15. Asia’s heavy-weight status (III) 30

16. Asia’s giants go their separate ways 31

Appendix: Survey firmographics 32

© The Economist Corporate Network 2015 3

4 © The Economist Corporate Network 2015

2. Asia gathering steam?

engine, China, is also slowing as authorities try to rebalance the economy.

Source: Economist Corporate Network ABOS 2015

© The Economist Corporate Network 2015 5

6 © The Economist Corporate Network 2015

© The Economist Corporate Network 2015 7

3. Are expectations for Asia realistic?

Chart 5: Is your company investing at the right rate in

8 © The Economist Corporate Network 2015

Importantly, the sense of under-investment appears to be correlated with the seniority of

© The Economist Corporate Network 2015 9

4. How impressive is the growth?

Chart 8: Nominal GDP growth and nominal sales growth in 2014

Source: Economist Corporate Network ABOS 2015

Source: Economist Corporate Network ABOS 2015

© The Economist Corporate Network 2015

6. Investment priorities in 2015

Source: Economist Corporate Network ABOS 2015

Source: Economist Corporate Network ABOS 2014

14 © The Economist Corporate Network 2015

7. Weathering the reform storm

Source: Economist Corporate Network ABOS 2015

16 © The Economist Corporate Network 2015

Source: Economist Corporate Network ABOS 2015

© The Economist Corporate Network 2015 17

18 © The Economist Corporate Network 2015

9. Driving profitability up and down

© The Economist Corporate Network 2015 19

20 © The Economist Corporate Network 2015

60 45.5 60.3 69.8

60 42.4 45.7 79.9

© The Economist Corporate Network 2015 21

22 © The Economist Corporate Network 2015

10. Worker woes

Chart 21: What is your staff turnover in these territories?

Source: Economist Corporate Network ABOS 2015

© The Economist Corporate Network 2015 23

11. Will sunlight help China grow?

Source: Economist Corporate Network ABOS 2015

24 © The Economist Corporate Network 2015

© The Economist Corporate Network 2015 25

12. Hub bubble and trouble

40 45.1 40.1 40.8

26 © The Economist Corporate Network 2015