Chinese, Indian firms most optimistic: Mckinsey survey

North Americans are the least optimistic about global economic conditions in the next six months, according to a McKinsey Quarterly survey of 7,300 senior executives of large and small companies. Executives in China and India turned out to be the most optimistic.

While 87 per cent of Chinese executives felt global economic conditions would be substantially or moderately better in the next six months, followed by 80 per cent for Indian executives, the figure for North America was significantly lower at 71 per cent.

In the case of developing countries, excluding China and India, the figure was 72 per cent. In Europe, 76 per cent of the executives polled felt conditions would improve substantially or moderately in the next six months.

While executives from both North America and Europe said overall economic conditions would be the most important business concern over the next 12 months (30 per cent of European and 29 per cent of North American executives felt so), executives from emerging markets said "hiring and retaining talent" was the biggest concern.

While 21 per cent of all emerging market executives felt this way, 17 per cent felt overall economic conditions were an area of concern. On the region that had the most promising growth prospects for the year, 61 per cent of the executives said it was Asia Pacific, 23 per cent North America and a mere 8 per cent Europe.

While 10 per cent of the executives in emerging markets said political stability was a worry, in the case of North America it was 2 per cent and Europe 3 percent. Emerging market executives also felt more threatened by protectionist trade policies than other groups.

Four per cent of the executives in these markets listed it as an area of concern, compared with 1 per cent for North America and 2 per cent for Europe.

Interestingly, executives made a clear distinction between the impact of outsourcing on the global economy and on their firms. While 79 per cent of North American executives said the impact on the global economy was very or somewhat positive, only 58 per cent said the same when asked about their companies.

In the case of Europe, 82 per cent polled felt the move was good for the economy, compared with 70 per cent who feel it was good for their companies as well.

Ninety-eight per cent of Indian executives said the move would be good for the world and 97 said it would be good for their companies as well. Ninety-five per cent of Chinese executives felt it was good for the world and 86 per cent felt it was good for their companies.

The overall economic climate is a smaller worry for small firms, those with a turnover of less than $1 billion. The small firms are more concerned about their ability to hire and retain talent and the access to capital.

While 17 per cent of small companies said hiring and retaining talent were a worry, only 12 per cent of large companies felt so. Also, access to capital was a concern for 15 per cent of small firms and 3 per cent of large ones.

The response to outsourcing also varied according to the size of the company. While 62 per cent companies with an annual revenue of under $10 million felt outsourcing was very or somewhat positive, the figure went up to 80 per cent in the case of companies with a turnover of over $5 billion.

Highlights of the survey

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• Executives from North America and Europe said overall economic conditions would be the most important business concern
• Executives from emerging markets said hiring and retaining talent was their biggest concern
• 61 per cent of the executives polled said Asia Pacific had the most promising growth prospects for the year
• Emerging market executives feel more threatened by protectionist trade policies than other groups
• Small firms are more concerned about their ability to hire and retain talent and their access to capital