Digital disruption is both a major business challenge and opportunity for corporates and start ups alike in this time of the fourth industrial revolution. A subject of focus for companies attending the Annual Meeting of New Champions in WEF Dalian.
Interestingly, our Asia Pacific Business Complexities Survey 2017 indicates that disruption is a one of the top three business challenges across most industries. This is driving many companies, including us, to come up with creative responses. The same survey also shows that the growth in China's economic influence shows no sign of abating. These two facts together lead us to expect a rise in the acquisition of disruptive startups by Chinese companies across all sectors.
We talked to the CEOs, C-Suite executives and senior decision makers at 150 of the region's largest companies in Asia Pacific to develop our survey. Two-thirds identified the need to innovate within their businesses innovation as a key challenge for their business, while 62% expected disruption from technology, like cloud services and big data, to be the biggest challenge. On top of that, 60% of the businesses surveyed said China was a major market for them and 77% expected China's influence to rise. Combine this with the expectation of 94% of respondents that mergers and acquisitions (M&A) would increase over the next two years. The confluence of factors fueling a Chinese spending spree in technology savvy startups and fast growth companies is striking.
With the rising influence of India, we may also see it compete with China for these investment opportunities in time. 95% of survey respondents considered India to be a major future regional player in cross-border M&A. However, China's growing influential role as a Free Trade Agreement and cross-border development leader, for example with the Regional Comprehensive Economic Partnership (RCEP) and One Belt, One Road (OBOR), could put Chinese companies in a strong position to buy up innovative startups outside of China.
Attending WEF allows us to explore some of the creative responses and business models that new champions and large corporates are developing. We are honored to be at the coal face of innovation with them.