Emerging markets are set to offer Australian businesses opportunities for growth over the coming year, according to research conducted by CFO Research in collaboration with American Express.
According to the survey, almost a quarter (22%) of CFO based in Australia say they will focus on increasing sales primarily by exporting to emerging markets over the next year. In addition, production activity in overseas emerging markets is expected to ramp up with more than half (56%) of Australian CFO planning to expand in this area, an increase of 12 percentage points over the previous year.
"Given the current economic climate, it is perhaps not surprising that the overwhelming majority of CFO have described their approach to spending and investment this year as 'modest', and largely to support top-line growth while improving profitability," said Christine Wakefield, American Express vice president and general manager, global commercial payments Australia and New Zealand.
"Interestingly, we are seeing a focus on emerging markets, not only for cost-effective production of goods, but also as a sales channel."
Spending and investment are also up compared with last year. In 2012, Australian CFO were among the most likely to exercise restraint in terms of spending and investment. In 2013, this figure has dropped 13 percentage points to 28 per cent. Over the coming year, Australian CFO indicate they intend to spend more in several areas of business, including:
Business and professional services (50 per cent of CFO likely to spend more over the next year);
Enterprise-level IT systems (38 per cent) Computer hardware (35 per cent); Labour / headcount (34 per cent); and Advertising, marketing and PR (34 per cent).
"Increased spending on business and professional services is a real turnaround from last year when only 16 per cent of Australian CFO were planning to spend more in this area. This indicates companies will have more funding available to look externally for business support," said Wakefield.
"The survey also reveals that more than a third of Australian senior finance executives will spend more on labour/headcount during the next year. After a cautious year, it would appear Australian companies are looking to loosen the purse strings slightly in order to pursue growth opportunities."
When it comes to investing for growth, more Australian CFO are likely to increase their investment levels compared to the global averages. Locally, CFO anticipate their focus will be on:
Expanding market access/sales and marketing activities (65 per cent of CFO likely to invest more over the next year); Improving production-process efficiency (61 per cent); and New production capacity (61 per cent).
However, Australian CFO are still concerned about downward price pressure with more than two-thirds (69 per cent) believing this to be more of an issue today compared with five years ago. Additionally, three quarters anticipate this pressure to increase over the next 12 months.
"While the number of CFO predicting economic expansion over the next year remains on par with last year at 69 per cent, companies are seeking opportunities to turn things around over the next 12 months," said Wakefield.
The sixth annual American Express/CFO Research Global Business and Spending Monitor surveyed more than 500 senior finance executives from around the world.
