Asian enterprises have experienced challenges due to rising inflation and operational expenses in the past year. Contributing factors include the global economic downturn, high borrowing costs, increase in raw materials prices, fluctuating foreign exchange rates, supply chain disruptions, and labor shortages. Despite this, some businesses have remained resilient by implementing strategic cost-saving measures, exploring new market opportunities, and capitalising on sustained domestic consumption and government economic stimulus plans.
A recent study surveyed over 4,000 businesses in Southeast Asia and Greater China. Common economic challenges, such as economic stability, government regulations, market competition, and technological advancements, were highlighted. Interestingly, high inflation and increased business costs were cited as main concerns by 32% of participants, while 24% were worried about increasing labor costs. About 27% of businesses felt negatively affected by the economic downturn.
Adapting Asian businesses amid rising costs
In contrast, 40% remained optimistic about the future business climate.
The majority of businesses surveyed agreed the current situation is challenging yet full of opportunities for growth. Interestingly, nearly 35% mentioned that they have explored innovative methods to adapt to the present hardships. Encouragingly, about 45% identified new opportunities in the midst of the crisis, with 50% planning to invest more in technology and digital marketing to increase customer reach.
At a national level, Indonesia and Vietnam were most optimistic, with positivity levels at 56% and 47% respectively. Asian economies, especially China and India, showed increased resilience, while European markets showed a modest increase in business sentiment. Economists suggest that strategies focusing on innovation and adaptability may help businesses navigate the current unstable business terrain.
Looking ahead, 30% of businesses plan to focus on cost reduction in the next one to three years. About 25% aim to increase productivity, while 20% intend to invest in new technology or machinery. Unconventionally, 15% aim to expand operations internationally, and 10% are considering changing their business models to adapt to evolving market dynamics, reflecting a flexible approach to dealing with internal and external pressures.
