Some 45 percent of Asia-Pacific business leaders are planning a cross-border merger or acquisition in the next 12 months to help fuel growth, according to PricewaterhouseCoopers' (PwC) 10th Annual Global CEO Survey, which questioned 1,100 top executives from 50 countries.

 

Of CEOs in emerging economies, the Asia-Pacific is the preferred region for possible mergers and acquisitions (M&As), followed by Western Europe, Eastern Europe and Latin America.

 

However, among all CEOs, Western Europe is the favored M&A market, followed by Asia-Pacific and North America.

 

While gaining access to foreign markets is important to future business plans, the majority of CEOs are investing close to home targeting countries in their region or traditional trading partners, the survey showed.

 

"They seem to be avoiding bold moves away from their comfort zones," said Frank Lyn, PwC China Markets Leader.

 

While gaining access to new customers is the main purpose cited for cross-border M&As, Asia-Pacific business leaders do not underestimate the difficulties faced in international acquisition and integration.

 

According to the report, cultural issues and conflicts, as well regulatory hurdles, are the main obstacles to cross-border M&As.

 

"The company should have a clear idea about their future business and then decide on the M&A strategy accordingly," said Lyn, who noted that a key challenge is human resources.

 

Yang Yuanqing, chairman of Lenovo Group, shared that viewpoint. "We have to face the challenge of human resources. We need talent from abroad."

 

The report shows that nine out of 10 CEOs in the Asia-Pacific region are upbeat about revenue growth in the next 12 months.

 

Confidence about prospects for revenue growth has reached a record level nearly twice as many global CEOs surveyed feel "very confident" about revenue growth over the next 12 months compared to five years ago.

 

Optimism aside, business leaders in the Asia-Pacific region are more wary of non-business risks. Nearly two-thirds said they were concerned about possible pandemics, a growing scarcity of natural resources, terrorism and global climate changes.

 

When surveyed about factors in their expansion plans in the 12 months ahead, Asia-Pacific CEOs pointed to new markets through geographic expansion (26 percent); better penetration of existing markets (23 percent); new product development (14 percent); and M&As often across borders (13 percent) .

 

In identifying their company's competitive advantages, the three most cited factors by CEOs on the mainland and in Hong Kong are outsourcing of both manufacturing and logistics and owning the company's entire value chain.

 

(China Daily February 7, 2007)